VAR - Earnings call transcript Q4 2019 | Varian Medical Systems Inc

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Operator

Greetings and welcome to the Varian Fourth Quarter Full Year 2019 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator instructions].

As a reminder, this conference is being recorded.

pleasure your my J. now is to host introduce It Relations President Michael Vice Investor for Bruff, Senior of Varian. Mr. you Thank Bruff, you may begin.

Michael Bruff

XXXX Thank you, fourth year fiscal welcome to call. operator. Good afternoon, quarter everyone and and Varian’s earnings full

After the Joining Wilson; operating and share prepared Gary long-term to Dow Financial our his call me on Chief more financial today are President results results Executive your and Dow and Bischoping. take Gary will our strategy, our we will and be Varian's in Officer, thoughts cover Officer, Chief will detail. remarks, our on and happy questions.

of Relations you and to call and intended results stated. and at non-GAAP are accompanying Investor Varian rates net the available per and www.varian.com/investorrs. fourth press fiscal presentation, fiscal earnings find diluted provide discussed share. are quarter otherwise additional On referred periods orders our to All any year release non-GAAP. are this periods All XXXX website year-over-year, references are all otherwise website, webcast growth to stated, to EPS reconciliations can perspective are are gross earnings our any on and unless which Unless full All A orders. to our financial references details. are

this subject earnings update undertake results and will call are not we any release, today's to During this and Actual based could our uncertainties. risks are conference statement. in SEC of differ forward-looking because to predictions, future which statements, We events. discussed statements and materially obligation any that or do filings. factors are making call, be other forward-looking projections These about expectations statements on assumptions current

Dow pleased I'm to to for comments. his that, with turn it And over

Dow Wilson

past key achieved growth provide and year. for and for thank Today, our as joining and have upcoming I'll outlook value contributed this share you long-term milestones the and us. strategy, creation well our they how Thanks, as the year, to everyone we quarter fiscal Mike

and Varian revenue X% fiscal reported is oncology Looking has consecutive growth growth. back, the second double-digit year this orders

business continuous strong being ever by than is core and powered our Our innovation.

growth and delivered trailing XX-months market through improving growth As year growth the a one operating percentage North tariff We strong proof with quarter. earnings payment point, of orders a to uncertainty throughout XX% alternative face the American to able a in were the quarter of the environment, X% around the model. our from of XX.X% executing successfully XX.X% mitigating fourth as actions manage and first quarter in in revenues and

executing businesses momentum, strong have our acquisitions our on our are We in and delivering quarter core growth expectations. fourth

to patients, our Our strategy and clinicians delivering shareholders. value is

touch revenues of revenues full XX.X% X%. or full fourth me our of grew increased robust performance. $X.X XX%. oncology by million growth earnings grew On billion and of on quarter year million $XXX revenue Operating Total year revenues XX%. basis, XX%. a let was Now of of This $XXX driven total

For the earnings operating million XX.X% of grew full or year, $XXX X%. of revenues

share declined of XX%, $X.XX EPS grew GAAP per X%. earnings of $X.XX while non-GAAP

XXX% For year, of $X.XX the of X%. EPS GAAP grew $X.XX grew and full non-GAAP EPS

were million, operations X%. from flows Cash $XXX up

accelerators. these we quarter, flows exclusions China fourth from year, States exclusions XX%. and China United tariffs both of pleased receive from medical full or impact are the from operations Representative million, $XXX for for In cash the down on the were For from sourced detail. will USTR to in imposed component the tariff discuss net linear Trade Gary more

is radiation the executing customers First, our therapy. and on cancer care solutions global on by enablers in in becoming powered towards progress their innovating our for four strategic focus leader patient: Our multidisciplinary

learning machine solutions. intelligence, artificial leveraging and cloud-based Second,

growing and Third, fourth, operational, improving And efficiency. businesses financial technologies. emerging capital and

therapy. First, let's our innovating on radiation progress review in

evidenced all of innovation radiation Services Cancer the services or promoter cycle, quarter services, was International are our offerings software therapy and and driving highs. hitting volumes orders all our with market revenues XXXX and record Treatment fourth by widen the net sustained to from unit hardware, new continue share This new industry-leading We CTSI, score worldwide leadership. for our gap in which market and

Our innovations ASTRO strong and multi-room both multiple months. expect and therapy into the Meeting an XXXX. trailing fiscal to now licenses quarter In the of continue deliver momentum customers continued specifically, seeing and China Users growth and growth had and in the over to at XXX. ProBeam unveiled At X,XXX over we China in our markets key we're XX India Ethos new incremental uptick including

an oncology net socket future most X% new units services, installed worldwide importantly and monitoring more Eclipse healthcare meaningful or performance of grew in radiotherapy revenues and business, XXX as base represents from Varian’s our of software, X,XXX leaders key were course patients’ lives independent both year. the and KLAS, category research In net upgrades by the specializing the on of in touched. TrueBeam reporting This firm Each units vendors. fiscal solutions recognized year

the Hardware for X% received X,XXX TrueBeam quarter, orders which was fourth in revenues the and year. Halcyon emerging XX% orders Fiscal manufactured both the systems for TrueBeam. XXX over orders record and quarter. XX% of year grew XXXX full in revenues markets. for taken and XXX for a We grew in were the on the quarter year XX% to

systems The XXX since installed successfully up Halcyon feedback. details. have now We May continued XXX forward Halcyon base orders to not ramped and specific we customer since launch. moving base taken now and of with Halcyon installed its order will exceptional have provide global launch sales XXXX is

therapy introduced was attendees which ASTRO therapy during imaging Ethos multi-modality targeted treatment Ethos in new deliver Trade over September standard trade in received a mid system. to workflow slot, time enabling therapy therapy Show and radiation in radiation possibilities earlier, in in at Chicago, intelligence artificial unveiled the and XXX delivery. XX the unlocks treatments, on-couch adaptive customers depth demonstrations, minute over using show personalized mentioned new to were As ability the X,XXX

market excitement received from Orders CE and grew six brachytherapy for and (k) we demand fiscal quarter, conversions to the including is XXX XXXX. Ethos year registered XX XXX over in systems system. highlighting the for afterloaders Australia Ethos new and pending. orders strong XX% During in Europe XX Mark and

and we our been new X,XXX launched Bravos Our base uptake Last brachytherapy systems. global afterloader the extraordinary. installed is customer year, has now

Hospital This Hospital new example, For in first quarter, high rate workflow and the using experience the treatment integrated efficiency. deliver afterloader. and dose by Bravos Karolinska University system is Scandinavia to Sweden, the Solna in treatments to clinical simplifying became this brachytherapy greater providing brachytherapy patient the designed improve

market innovation globe. led XX% on has year. treatment resource growth and gap the full skills emphasis the remain and On the integration investing with current planning to on for help needs focused for software efficient software capitalize the clinical close on of evolving workflow, front, the to and systems innovation to in quality This quarter around the we XX%

Oncology and there. software in This quarter selected to Varian radiotherapy centers Eclipse three Information replace Treatment important three to The System luminary at supply was solutions Varian solution Serbia. centers Planning ARIA competitive will

in and won software for tender this Tianjin Hospital also workflow. big our at first a We Tumor localized ARIA China Information includes software China that quarter language Clinical platform, China

received Eclipse in Criteria August for MCO radiotherapy over orders. solution Optimization X,XXX stereotactic Orders our radiosurgery grew planning HyperArc, high double-digits or the its XXX Multi taken quarter. HyperArc Orders grew for since definition now the over for MCO launch. double-digits We've orders and for XXXX we've software quarter in now

by grew services U.S. in strength installed the offerings compared in lead of X% quarter services again in ranked represents our we and XXXX industry base. first growing to the a in the with to service net we're IMV’s promoter score our for year report, score and Our revenues recommend once validated was driven at as colleague customer This for The full which score. would competitor honored X% track metric that a loyalty XX%. a this likelihood the with a XX% nearest manufacturer of customer the

to acquired technology enabled and in XXXX physical services. strengthen further our core power CTSI Finally, we new

of contract total sites operations across currently market rooms over market total currently proton services proton X will the a out the four into investing XX took adoption. the order now are XX a and in XX We globally. Proton year. this one In operational fourth integrated quarter. business orders successfully We orders of build our our handed the for Oncology CTSI business. were which in in is of to mature under now quarter that new we productivity rooms drive Systems Solutions have including emerging fiscal are clinical these

another Proton State's first Center delivering York anticipated first is patients therapy including Cancer treatment highly complex and cancer Health currently The treat System size, Center, advanced proton form treated New Health its Variance York on a the New and patients, pediatric NYPC System. collaboration System. ProBeam of Montefiore NYPC Mount is disease Therapy patients Sinai Sloan X,XXX facility Kettering is to Proton radiation most Memorial available. annually, between

center to Arthur system. Cancer and proton Ohio in a Ohio order an ProBeam from fourth collaboration new the In the we University multi-room is James therapy Ohio equip J. This University a quarter, Cancer, Comprehensive Richard proton with State XXX State facility new between Hospital booked Central

Institute The is Research Children's and and in patients treat for Solove both Nationwide and adult scheduled will cancer XXXX. facility early pediatric Hospital. completion

technologies new strategy in Penn a in XXXX, selected ProBeam part Subsequent selection single-room Medicine treatments care to Construction with additional XXXX. the the first it model. and system September The were of multi-disciplinary providing in Varian quarter, serves to of XXX treatment new we their patient by cancer ongoing innovative the Penn of the as at began close is Medicine's communities center through of expected Varian install, configuration cancer center.

to partners innovative that clinical chosen treatments. as providing particle proton be these honored therapy capabilities that institutions, We're with technologies advance further luminary

smallest ASTRO, an XXX such patient The and offers FLASH path ProBeam the total is cost ownership viable for configuration of today superior launched the multi-room the potential human XXX centered treatments therapy. system. therapy multi-room next-generation to system available design, system At efficient proton and as we workflow, optimized ProBeam the

the year, formation treatments action in to we efforts groundbreaking protons. dose steam. potentially last cancer to with study the In of of to October the mechanism rate FlashForward understand gather ultrahigh FlashForward continued announced Consortium Consortium

our PTCOG using past added numerous milestone of FLASH an presented have important ASTRO, key demonstrated first treatment the AACR, this achievements AAPM, system use for integrated We at were and in trade results year, protons. treatment delivery annual ISRS shows meetings, and all industry. planning We

ultrahigh tissues models. gained biology both impact of immune insights early of on works, protection FLASH the normal the impact and role on of also the how including system, the rates dose and FLASH oxygen into preclinical normal in We tumor of tissue in the

community medical we and the The to been academic therapy forward has patients. support to encouraging FLASH look bringing from as

a effective continue treatment partners work worldwide and We will integrated with to our to ensure modality. safe,

comprised use machine Second, can intelligence multimodality progress our intelligence, treatment slot, the normal treatment a XX and the anatomy, patient. further leading treatment CT for We've Netherlands. cone-beam the now Amsterdam daily deliver clinical we is adopting better Adaptive has visualize for established of CT examples and at globally to personalized iterative chosen and an better who of just the console. This differentiation customers images every MR, changes Ethos artificial dose to generate and turn in Artificial of accelerate solutions. who have To one working Intelligence the to for momentum, new will received an enabling Ethos UMC order cloud images of therapy. PET, Consortium let's our leveraging evidence showing system, exciting therapy learning be in as therapy Ethos technical such Ethos. powers globally luminary many institutions solutions Clinicians ultimately of

X,XXX of RapidPlan, over is and locations. now grew that the the for was for years We've in at taken double-digits over machine field software in to-date oncology our learning X,XXX RapidPlan individualized first ago application installed orders Orders XXX the launched customer planning treatment quarter. five licenses and radiation

Noona, for our in partnership over with This new and managing at software capturing progress deployed year reaching cancer patient patients patient substantial Tennessee year. XX being per over of centers the our made Oncology. symptoms outcomes care deployment across in and Tennessee reported we is to Noona application XX,XXX

Michigan involved Once XX new XX,XXX Consortium. of are Michigan across in Michigan, centers additional deployed cases per in with our Oncology partnership Noona will XX reach the programs we cancer cancer Additionally, State to through close Quality in year.

through rolling interventional made asset our year the through core. The Third, addressable We the outside let's the growing and we This purchase fiscal microspheres oncology strides and portfolio. of market Alicon markets technologies. acquisitions billion that in $X.X through Scientific’s platforms significant interventional We oncology more patients opportunities is the combination maximize from to software -- see businesses of Endocare, fast acquisitions entered emerging Boston discuss our our market combination and expected year to therapies meaningful our specifically touch value through leveraging $XXX XXXX. grow between outcomes. will and million businesses in creation this

services for Solutions represent quarter we to is business and revenues microspheres revenues month patients. at deeply clinicians This of Oncology million] our interventional second the oncology in Interventional Interventional Miami, Florida. revenues ablation from embolization fiscal and to offering showcased reporting the segment. treatment portfolio. for Oncology This quarter solutions the on [$XX of Interventional symposium the other our innovative ablation We in Interventional ongoing Clinical microwave under oncology development were committed fourth remain embolic XXXX. our cryoablation sales oncology

Additionally, to trial fourth We're creating consortium and with company's technology. performance development in radioablation with our pleased cardiac a clinical year. and strategies. our continue the of in Overall, to we team the invest the building development product are the assist a we out full quarter and clinical

now enabler on and results. the it and our to year over fourth discuss I'll turn full who strategic will quarter provide context Gary, more financial fourth

Gary Bischoping

Thanks, Dow, and hello, everyone.

operational requires liquidity of financial profitability over efficiency and capital a Our and enabler time. fourth strategic growth, improving between maintaining balance

year quarter, up XX% growth $X.X of Full and revenues impact the the grew or Alicon me XX% or of with Let constant revenues which Scientific were up currency. in growth. Organic excludes currency. $XXX in revenues year-over-year and Endocare, were of acquisitions fourth XX%. Companywide CTSI, Boston the billion FX constant XX% XX% in start portfolio B from million

million the quarter. growth hardware, across oncology, software X% revenues and million in were in up In or contributed constant CTSI by X% $XX driven revenues currency robust services. $XXX

For Orders currency. constant year constant revenues oncology XX% XX% in currency. the grew year-on-year $X.X X% or up billion, full in and were

or the billion We currency in ended $X.X constant X% with For up billion. X%. year the in orders XX% backlog, full grew quarter $X.X to

CTSI XX% based in orders APAC of than XX% full acquisitions XXXX. less approximately from June for year EMEIA, the timing was X% Our and in the on in Americas, and mix close XX% in

The grew results. a business Taking quarter the in the quarter the Americas, America In our X% the X% in X% for X% at closer revenues year. full oncology look in the grew and full and Revenues for which year. the North for by year in portfolio, the XX% orders $XXX of our full is North strength a driven America. X% Orders growth environment. ideally Americas grew value-based grew positioned quarter, across million with in in care X%

$XX we quarter, University order million TrueBeam for the Century quarter. the $XX of we XXst commitment from from received was Oncology their in received for XX booked network. accelerators million a replacement Approximately in-associate Rochester. multiyear In software fourth across systems, the Also of

geography, In XX%. revenues our year. in Middle Europe, East, Africa the million quarter quarter, increasing were India grew Orders the X% for XX% and $XXX and the in

as part XX growth Europe as for For was year, Agreement driven Tata grew in regional in part Trusts orders Robust the of full the well as Framework EMEIA orders and XX%. performance in by TrueBeam systems Southeast CTSI services.

demand and China, portfolio the offset to year. grew the we XX% full quarter for were the in Asia orders full remain market Southeast in The Pacific in by in X% in Asia revenues fourth and X%. growth Japan Halcyon XX% and strong entire partially including see quarter. orders quarter In of grew Korea. continue leaders our decreasing XX solutions, for challenging million the the was year, quarter, the $XXX China Orders for

Korea sold and the received first to VitalBeam Singapore four the and Kong driver. systems fourth and for orders system in geography Asia Hong We've continue in growth Korea quarter. Our during Southeast HyperArc be a

decline Solutions quarter, posted in Proton compared Our last X% revenues million business the of year. $XX of with a

For the million, down year, revenues full X%. were $XXX

continue Turning driven to total we across by company of of our XXX where gross the revenue business, increased profitability, solid oncology growth see margin portfolio. points, to basis revenues XX.X%

installed points revenues exclusion, fourth and points increased basis to volume revenues and Halcyon CTSI by gross services XX decreased of base quarter growth XX.X% from driven tariff margin of rate margin gross the software and year, from basis full increased the For XX.X%. increased advantage acquisition. Oncology XXX

higher impact, points software driven in to activity gross tariffs to by upgrade oncology shift costs markets by contract increased XXX decreased due emerging XX.X%, fiscal Full regional basis to year XXXX. and margin

quarter, strategy. was Proton expenses this quarter year value investments driven be strategic revenues. Solutions, Full orders. were Looking primarily representing continue and of R&D of full growth million X% R&D radiotherapy/and gross will revenues. X% the of dollars was by of gross creation for $XX In long-term $XX key programs. were timing year driven at year up driver innovation were margin to margin the $XXX fourth investment software, up adaptive of spend dollars X% million, $X a in by our X.X% other million, XX%, million. down up at Investments R&D and

fourth $XXX which or occur a the did SG&A the in quarter by as points triggered the basis of XXX XXXX quarter In by benefit percent up of expenses revenues, year million XX.X% tariff were the event, XXXX. primarily driven acquisitions, ASTRO expenses fiscal September revenues, and not of recent

of For percent driven acquisitions ASTRO points $XXX year. increase and of basis the in primarily operating The one XX%. to by revenues. fiscal million XX.X% XX Company or year full a events up were $XXX increasing revenues, having was SG&A million were as XX.X% or of expenses recent revenues, earnings

operating $XXX revenues, the year, or XX.X% earnings were For X%. increased of million full

taxes. Turning to

Intangible Low For updates the non-GAAP was tax BEAT share to per Erosion our Base Tax update Global the effective Cuts Tax full tax estimated year, was GILTI was impact Act. The rate or rate non-GAAP to and the the anticipated of by or and driven the in XX.X% and our approximately guidance original was Tax primarily higher rate earnings Anti-Abuse XX.X%. The GAAP of related impact than rate effective and $X.XX. negative tax tax provisions to and our in Jobs Income

EPS non-GAAP XX.X of the diluted in $X.XX $X.XX was shares GAAP was quarter. and with million EPS count related share

note case expectations pleased acquisitions the We performed are business that quarter. our our in to fourth above

EPS was year, full was X%. EPS non-GAAP GAAP $X.XX, and For the $X.XX, up

to a basis. due cost per in million was receive The non-GAAP and on the pleased to a share earnings exclusions million operating to of tariff The China. the or in benefit $XX $XX benefit a had $X net to benefit are million earnings we to exclusion revenues mentioned, two expense Dow fourth exclusions triggered quarter. As receiving $X.XX revenues, million $X a very

and The increase discretionary by annual fund contributions research net U.S. based tax benefit expenses mostly related offset to in and previously mentioned to the was independently training. rate that foundations

Additionally, higher momentum in our core operational partially spend expectations spend recent early above this in came in was although offset by businesses acquisitions. our

the of fourth recognition. tariff the of record quarter Incrementally, not potential due refund million timing company did to approximately $XX in

benefit expect XXXX. recognize in to this We fiscal

higher million and balance from liquidity, and $XXX for with the the debt. million cash the equivalents Cash in were to and due XX% days revenue fiscal down $XXX year, of than to XXX year to product year, capital flows was sheet strong Turning we in year ended $XXX momentum. and the X cash days higher Oncology transitions DSO million support growth. working to last due operations

addition In million $XX included stock. quarter $XX other our in of in to to million and R&D repurchase investments CapEx shares the

As year, of of our the the million under X.X remaining end repurchase had share shares authorization. we existing

now will who guidance. it back to discuss I our turn Dow, XXXX fiscal will year over annual

Dow Wilson

Thanks, Gary.

Officer, our emerging as focus Solutions Before share role to incubation from Endocare, Chief to Oncology and Oncology XX, create Proton of businesses Finance and will the report we Officer, Finance Investor December Interventional our business to as as take Officer this acquired capacity with XXXX, by Kennedy, Chief turning will the President Scientific Effective time Solutions. will Growth team. President in under Senior our Vice new leadership of Growth putting recently President Relations role to it’s stage Growth Finance microsphere Financial she Chief Chief will on Mike the of move the Proton acquisition cardiac Bischoping, Senior succeed Office. which and business leading executives down performance this currently, a Vice I'd directly regarding and incubating Chief well currently Kolleen as Solutions new changes Interventional Vice to right robust the me. Gary continue Gary President in and Solutions a including from guidance, integration the radioablation Alicon, success therapy business, President Officer. Officer. the under on and and and Oncology Finance Growth integration Bruff, Senior Earlier to technologies Kolleen Chief Boston Based like our announced will FLASH and year President Interventional combined Solutions the bead Both as office. assets embolic bland you the the

As success and Varian both will and continues business to the bench to help our of our evolve capabilities deep in long-term. grow, propel the organization leadership across near

solutions continues looking to and momentum products forward in XXXX, And guidance market. growth year the consider of to now, market the fiscal our projected our and

cloud-based invest recently out of building representative. China from China, in year both capabilities tariff core commitment trade more initiatives, and strong acquisitions FLASH global shareholders. growth in growth sales Expecting services, capacity ramping driving meaningful business to and research patient fueling offering and long-term growth performance, technology, to continue fiscal development recent our invest drive enabled considers is Noona aligned by in patients in distribution outcome the announced growth reported and operational with guidance company the and infrastructure Our XXXX investments innovation, our to exclusions including: by touching our and our to our Continuing scalable U.S. for plans technology go-to-market software.

consideration of fiscal assumptions, After year the for careful these expect following we XXXX:

growth year of weighted-average assumes share of billion includes a The guidance expected percentage million. The the diluted rate as of to to acquisitions $X.X fiscal of to-date from and the rates to $X.X as per enacted all a of billion, of tariffs. $X.XX $XXX a representing of of X% beginning XX.X% share also Non-GAAP XX.X% revenues $X.XX. XX.X%. $XX and of effective million of XX%. million. flows count XX.X% non-GAAP Cash of Non-GAAP impact includes announced operations guidance to $XXX earnings to tax currency operating currently XXXX, assumes earnings to Revenue

you. now to Q&A. Operator? go And let's Thank

Operator

[Operator Instructions].

Please question Matt your proceed Taylor, UBS. first Our with question. is from

Matt Taylor

so U.S. the in that in uncertainty especially bit folks the expected a the drove a that the where think had talk be to I investors most little of order about lot strong you question is mind of there in dynamics Can to North strong order that very top you think So, be could America? I quarter probably for growth here is, some

Dow Wilson

of number a there's think factors here, I Matt. Yes,

grew you XX the as our kind oncology everybody very in on very X% to strong orders heard the the short-term. growth pleased, months of of we're think X% from a quarter. North number impact these the One, things all, on overestimates bit factors. little in A America of I call First of

As coming thought we the good very we funnel had we into quarter, said a last quarter.

based say very our overall, Second, portfolio I'd positioned market. value well is a for

got despite products to should for think saw and point. position. portfolio, not that's the expensive not the good we've January best and U.S. niche We this We is room Ethos I it So that we U.S. volume see to exactly I that's sell, the best having Ethos impact, year, some maybe volume global, not want yet towards early don't make end that's approval have of XXX(k) late the good. in saw

I thing That funnel developed very market the at is last strong, software and and I that really portfolio maybe this well point year. very for our lined quarter think portfolio much great the heard would So growth. the outstanding is market product is the results up of remains is in both add and you the business

the We starting you mention it’s nice software in received the in order China, we've heard are ever to order China. me see, biggest

China has getting speaking is thing a customer like I we've as the that So interfaces product. right workflow to right I the there. is and done well needs one deal Yes, and the team mean localized but big responding Chinese and the what really in

is product in for markets. that think So developed continued and growth developing both positioned

Matt Taylor

see got any take of at to off this can that, of the talk environment? for it launched Maybe, reception kind in about there. or should you was expect the to ASTRO you ask when the if It Ethos just strong up funnel out how one pretty we I feedback Can follow gate that nice on that and and you resonate orders.

Dow Wilson

said middle We terrific. in September. as was launch just of launched call ASTRO I The the it

kind in Ethos it through just went as across a customers team of had Hospital we participation China in and is say first excitement hitting only really an in at high, to really or now of markets. Herlev this XX a of our both not and community station, the We environment. we're yet is in non-adaptive ideal XXX So or segments it sites. -- device I’d fill still adaptation mix great for adaptive the the recovery very patients the patients. both especially so ASTRO But our six we both weeks U.S. had quarter. APM had couple They're academic We're XX, by first by five sites, the it's doing selling treated patients and day

we're of So that's the the get out think once momentum to in XXX(k) the I that U.S. looking product approval. we

Operator

Our question Please proceed Bednar, with is from Jason question. next Baird. your

Jason Bednar

curve launch. out does I adoption between, not in adoption this you congrats or from standpoint? the here next to starting their or acknowledging, TrueBeam on in Ethos, just there the more Matt’s think I wanted understanding where you look to closely over month maybe slot that here. little I next few roles first the Halcyon couple following as first over years, just up just as curve somewhere kind to a Gary the contemplate the where see but Then, guess may an upcoming just new do over you out follow be mean quarters as fully mean I and maybe offer as to Mike But question into you on a of the potential

Dow Wilson

TrueBeam wish surprising we're could TrueBeam. you, now Halcyon, Jason, then with I and you a I me. Ethos. on had because we we call, of tell started top quarter launching record had of and the on record Halcyon, keep top And it on TrueBeam, on we they When a say quarter heard in

these We it. bullish plus pretty upgrades. XX X about we're So, orders got

the penetration see think community meaningful, into really I market niche, to where So, it’s disrupt going the that and think to it's of it's we I but will adaptive focused segment on a hospital start market.

Ethos selling going really a we're democratize, us, important the a to standard slot. make really treatment for technology portfolio and is I in available think So, and

add all what day, number really the installed we see you And base you're X% at growth think and like of of up, it mean on the I we of end sockets. total course, to then when I the had starting that,

X,XXX new over XXX year. well incremental sockets So, sockets, the on

stuff, so that we're getting the replacing sockets, installed and why most, not base number us watch what new for just that's to happens overall which So, investors, we're can growth. is matters our range we're to disclosing growing what of pie, they

Jason Bednar

do then the in brief out we follow-up, the is mindful still a look 'XX, for And I maybe tough just quarter be have Japanese fiscal have order through we quarters that we APAC that growth that in helpful. next the That's will something Yes. number quarters the order the do more tick first order down half next or of of of, of comps to here, you in couple look mean go temporary over as in we should region? and some is see that couple at this

Dow Wilson

keep you trailing focused on XX. just I’ll a

Our market have that trailing solid largely strong in offset by Yes, XX% has Southeast on our the constant growth. China we XX greater performance very been pretty in us Japan, and quarter Korea for currency Asia, quarter. overall was Asia didn't then

As starting of I quota. in some said the to are remarks, see we the pull down China

to quarters on had opposed growth But go-to-market lumpy. So, better that’s be where but starting row, China to of XX, kind very of that recently, strong like of -- as market several We year market, so that's the in had in good that trailing to a and market. see great down. X double-digit there especially Japan, we some it’s going so upside not news Japan, some in quarters pull last China,

very position. standpoint remain share we China, solid in a Japan and From in

competitiveness fine, there a hanging of from just that's at point view, growing. even So, least in

Operator

from with Petrone, question. Jefferies. Please proceed your Anthony is question next Our

Anthony Petrone

of and there. Guidance to revenue was of Dow one actually number there’s going constant parts and start our with ahead in expectation I'm both guidance. currency moving in reported growth just a

one, much the the interventional the So guidance how tariff fiscal and of how I couple XXXX, oncology And at as reflects; on top then reversal is bottom-line; then rollout? and from you follow the have much both a ups. look of

Dow Wilson

a It's detail. we Anthony question. walk you in good through will it

the say the Gary so the of you Let starts broad very actually I'd pleased I'll turn as and over know me growth We're kind with orders based. start P&L the and have orders they're details. with terrific and to for been there

part organic et is the of portfolio Halcyon, services especially So we're parts them in accretive business The software, of seeing booming. cetera.

you give we if 'XX Gary organic of operating almost as a of the investment. over turn year of $XXX the earnings guidance. $XXX we on a to start you when introduction, look with earning complete So million points And let view, me at from it kind there's at year-over-year walk fiscal think year-over-year that to million, an

Gary Bischoping

what to million of clarify accretion, $XXX Yes, organic I that operating year-over-year would say right? just there from margin over point, basis is a

Dow Wilson

Tariffs, reported. XXX million

Gary Bischoping

Tariffs ex-acquisitions, right.

growing growth than Dow's point And the on dollars. is, and you're margin that's pulling so what that of now line software hardware the and that margin that's inside right growth more seeing to you’re through growth faster revenue seeing revenue

margin. You're through seeing base installed the whish growth higher a at now services the P&L of the also pulling is part

the on installed them now the in we As of we've Halcyon there got out call through field. XXX referenced banging P&L, the

to You're the see now starting in accretion the that margin. from

seeing side, growth the So that business core strong as addition the more we VPS the and clinic that fact on services get in on we rooms now coupled to in the to one margin are of get period. with proton installed grow side, year business that the out expansion

operating and that itself core portfolio you the also of the the noise see mentioned. tariffs with can So you’re we unveil the now tariffs you can out you company. And the really with as the of in impact see performance the you of seeing have kind

in China growth in Building more to in the operating. out is that the what our the and that while making -- and company to right, maintain further think ability the ongoing to running right is R&D out place in Chris deliver to of the guidance to up to of the investments drive portfolio stacks investments delivering all we that guide Anthony long-term. All medium we're doing P&L. the acquisitions, that innovation significant grow, So all over

good have we side to the core pragmatic off investment well. that as on So to are summarize the well acquisition being by the as as think this and acquisitions we is driven start, growth guidance, significant is a a the

Anthony Petrone

away just into on then One a mentioned CMS you from rule. I We're mean Dow, And I two just or bundle. or so sort just have the me. more any final And the oncology of ups rule? you follow bit the China guess final week about opinions expectations a little quick as back do China A the guys year 'XX the guess order I -- you of look that in Class was Thanks again. flow the what off flow for but in from expectation is could last I fiscal can even comment we think next for your the contribution some the licenses. quarter order B see specifically and

Dow Wilson

say, reimbursements anything have don't you really the on to Yes, I'd we on. side, update

kind is things. we of There comments posted investor website on thorough. pretty on some see where we're our think I

pleased software know I of business were update. we strength and performance the Obviously, is much portfolio and if hardware shows in it the this you together. of businesses So, don't an of with especially quarter, the very the and U.S. the the there

well. growth also because non-U.S. we had to orders over are We XXXX. number. in I'd comps and do very China, China hitting acquisitions we say have strong as U.S. market tougher guide that don't markets New both have double-digit in

think there. remain I very strong we'll

looks funnel So, good.

We are X.X. excited about Halcyon

but be course fast momentum how important get good some second late depending get in it very in to soon. got Halcyon -- -- we And mid-year, then the regulatory have that our market year, have year, China approval remains of next Ethos can X.X on that we should So, largest we and us. But may the through. launch will coming we market, we

to what outstanding invest that's an have see. in executing continue we like really We team, team in China and we the

Operator

with JPMorgan your Please proceed Peterson, question is question. next Our Tycho and Company. Chase from

Tycho Peterson

guidance? that in question. have in you And of kind M&A? through or further to Anthony’s that hear kind build portfolio opportunities And interventional want can now of revenue didn't to contribution is here. actually how you do in the do out I to you critical with start think I quantify the move the the of answer what kind mass about

Dow Wilson

sure. go Gary, forward. Yes,

Gary Bischoping

Yes.

got have the specifically able interventional what that got asset think embolic acquisition. Boston acquired from and bead to investment a Tycho we've go-to-market portfolio working our we be portfolio to I on good the the with way our we're delivering just to oncology would in represent start well. I as to say Scientific business that we

forward, the acquired That’s in earlier forward of investments we've going to biggest of see the continue. coupled One that is with going the opportunity my differentiate that what enable part really we'll we and software, portfolio I perspective comments. from that outlined us things

there something go and driving So, where looking over well kind that portfolio we're and forward in that were, of time it’s IOs was to two drive probably to RT getting decades marketplace. ago and positioned

Dow Wilson

we of global a product looking build largely U.S. Boston looking but Chinese Yes, The I product that product product. an some Endocare that's purchase we've it, investments to making we're capability. of some in global product since that distribution, Alicon got alluded now, for is think terms a the has is for was distribution. and largely asset global It's got to it there, Scientific Gary distribution the it

good to really view, good rates some looking and We we and dynamic a administrative XXXX the on big and of building focus. like and be grower we've our a will for investments make infrastructure to a of from the the business, got really us feet lot So, get in think very, sell the street product forward. growth the of that in margin are very point kind selling that's

Gary Bischoping

-- that on guidance organic our Tycho Yes, year-on-year. did that gave organic question, guidance your outline we in we

X%. growth currency acquisitions, So that's to year-on-year X% revenue organic and the excluding excluding to

see can combined you from acquisitions. net of in the kind to currency points of a there and impact So basis XXX XXX

Tycho Peterson

XX million instead Okay, it of then the million? on and in is the refund XX tariff only the dynamic, why

Gary Bischoping

as that tariff some the remaining, and I'm of of there available million. a again, about whole outset is about we as million for me clarify our be tariff would because at $XX right. talked the operational let to gross was actions, about -- well Yes, Through $XX that right. walk we refund, you walk the going gross were and kind The tariff from impact, impact talk where through that

did the on structure, the things of we just avoided did Now million chain side, tariffs tariffs. the there's $XX about we remaining and we entity of supply then million around remember $XX things legal about

So tariff again gross for that's $XX refund. the available million down amount of million, to $XX

remind fiscal 'XX. impact some tariffs everybody Now, I'd also in had year that QX we of

So import million what accounting we some you million. $XX of will, from year received that take add that get gave a you now our products booking agencies from that that China, from them did 'XX, our million work into $XX through another refund comfort fiscal $X available $XX Of we around with available import-export the million if we that us perspective. total pool, documentation from you refund an you to

approval. we were However, of there There some from. just some -- get when that of were matter it's a didn't the timing got we documentation

million about that not did $XX $XX of in recognize million 'XX. fiscal we year So

you million. So to that gets down $XX

piece the guidance incur had couple in, million, of guidance, last P&L weeks us September, tariff the in to stuff we to date. in the is the -- transparent, be running because the XXth is this, from about didn't right, a on avoidance of fully received be to we Just shift exclusion gives QX that we of transparent through actually exclusion we our that versus that the our relative $X to post

then as and exclusion through So million. a China we to that to help outlined $X process work benefit us P&L costs gives the million the as tariff us process that used up and of $XX worked advisors you in through we the

to year actual alluded not the and to $XX in fiscal I post $XX have Tycho? to and $XX Does down the in that fourth we'll that that documentation then So million 'XX. fiscal specifically million in FY did that's 'XX get quarter inside million of clarify that year for that 'XX, we

Tycho Peterson

to the on expectation what Yes. That's your one from for then or revenue last exemption, helpful. in do orders be? the and on Dow the there case for the impact be to you for is proton And that event included expect base profitability APM no proton excluded is bundle,

Dow Wilson

proposed for as your good is at tell really a you the chorus rule We're been can point, the that changed. dramatic was community. guess proton is this I mine. hopeful And therapy. has There pretty All as it's from

Operator

at I further and no to for Wilson turn back Instructions]. will There questions now Dow over this time are call remarks. closing [Operator the

Dow Wilson

we're tremendous In very you, our to we Fiscal solid performance as pleased Thank Year. and We're momentum, with have closing, the that operator. core very year enter business finish is strong. the next excited

are we tariff expectations exclusion. important acquisitions Our growth received above recent and delivering

York delivering and hope at join to City is will strategy growth our November Investor and long-term Our shareholders. XXth for to working creation Day you us on value more. I learn growth New Varian's

the do, fear everything innovating for us As new ultimate in victory, we technologies and without Thanks a driving committed today. of remain in world and we investing always, toward to cancer. joining

Operator

today's conference. concludes This

you your time. lines from participation. your Thank disconnect this may You

Varian Medical Systems (VAR) 23 Oct 192019 Q4 Earnings call transcript