Varian Medical Systems (VAR) Trims FY15 EPS Outlook

Varian Medical Systems (NYSE: VAR) that it expects to report lower earnings for fiscal year 2015 than was previously guided in its earnings report for the third quarter of the fiscal year. The company now expects non-GAAP net earnings will be approximately $4.29 per diluted share and that GAAP net earnings will be approximately $4.09 per diluted share. The company continues to expect that revenues for the year will grow by about 2 percent, or 6 percent on a constant currency basis. These preliminary results are subject to revision due to the completion of the company's financial closing procedures, final adjustments and other developments that may arise between the date of this press release and the time that the company reports its full fiscal year results on October 28, 2015.

*** The Street see FY15 EPS of $4.40.

"Several TrueBeams and related software slipped out of the quarter contributing to a shortfall in high-margin revenues for our Oncology Systems business," said Dow Wilson, CEO of Varian Medical Systems. "The earnings shortfall was partially offset by an approximately one-point drop in the projected annual tax rate."

Oncology Systems fourth quarter gross orders are expected to be equal with the strong prior year period and up about 5 percent in constant currency. For fiscal year 2015, Oncology gross orders are expected to be equal with the prior year, and up 6 percent in constant currency. Compared to the corresponding prior year periods, Imaging Components gross orders are expected to decline by about 30 percent for the fourth quarter and by about 16 percent for the fiscal year. Imaging Components sells almost exclusively in dollars. The fourth quarter results should also include proton gross orders totaling about $140 million for three centers. The year-ending backlog for the company is expected to be $3.5 billion, up 10 percent from the year-ago period.

With the orders growth in the Oncology and Proton businesses partially offset by ongoing challenges in the Imaging Components business, the company expects revenues for fiscal year 2016 to grow in the range of 4 to 5 percent on a reported basis. The company's non-GAAP net earnings for fiscal year 2016 should be in the range of $4.45 to $4.55 per diluted share. The company will begin to report non-GAAP results in the fourth quarter of fiscal year 2015.

Non-GAAP results will exclude amortization of intangible assets, acquisition-related costs and benefits, restructuring charges, impairment charges, significant litigation charges or benefits and associated legal costs. This will enable the company to evaluate performance on an operational basis; provide quarter-over-quarter comparisons excluding unusual items; show better comparability among company peers and provide additional transparency to the financial community.

Fourth Quarter and Fiscal Year 2015 Earnings Report Results for the fourth quarter of fiscal year 2015 will be released following the close of regular trading on Wednesday, October 28, 2015. The news release will be followed by a teleconference available to all interested parties at 2:00 p.m. PT. The news release and a link to the conference call webcast will be available on the company website at: http://investors.varian.com/events-webcasts. To access the teleconference call and replay:

• Teleconference: Access from within the U.S. by dialing 1-877-869-3847, and from outside the U.S. by dialing 1-201-689-8261.
• Replay: Access from within the U.S. by dialing 1-877-660-6853 and from outside the U.S. by dialing 1-201-612-7415, and enter conference ID 13619357. The teleconference will be rebroadcast until 8:00 p.m. ET, Friday, October 30, 2015.
• Webcast: Visit the company website at: www.varian.com/investor and click on the link for Fourth Quarter Earnings Results under Investor Highlights. Web conferences will be archived on the company website for a year.

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