Varian Medical Systems (VAR) has reported 42.16 percent plunge in profit for the quarter ended Mar. 31, 2017. The company has earned $56.10 million, or $0.60 a share in the quarter, compared with $97 million, or $1.01 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $83 million, or $0.89 a share compared with $84.10 million or $0.87 a share, a year ago.
Revenue during the quarter grew 6.47 percent to $655 million from $615.20 million in the previous year period. Gross margin for the quarter expanded 8 basis points over the previous year period to 42.03 percent. Total expenses were 86.29 percent of quarterly revenues, up from 83.26 percent for the same period last year. That has resulted in a contraction of 303 basis points in operating margin to 13.71 percent.
Operating income for the quarter was $89.80 million, compared with $103 million in the previous year period.
However, the adjusted operating income for the quarter stood at $105.60 million compared to $112.10 million in the prior year period. At the same time, adjusted operating margin contracted 210 basis points in the quarter to 16.12 percent from 18.22 percent in the last year period.
"Varian’s second-quarter EPS performance was at the high end of our expectations," said Dow Wilson, chief executive officer of Varian Medical Systems. "Gross orders for our Oncology business grew in mid-single digits and we booked a new proton order during the quarter. We achieved healthy revenue growth and a nearly one-point gain in our Oncology gross margin rate while also stepping up our investment in the introduction and commercialization of new products."
For the third-quarter, Varian Medical Systems projects revenue to grow at 3 percent. On an adjusted basis, the company expects diluted earnings per share to be in the range of $0.92 to $0.96.
For fiscal year 2017, Varian Medical Systems forecasts revenue to grow in the range of 2 percent to 4 percent. The company expects diluted earnings per share to be in the range of $3.56 to $3.64.
Working capital drops significantlyVarian Medical Systems has witnessed a decline in the working capital over the last year. It stood at $736.10 million as at Mar. 31, 2017, down 31.78 percent or $342.98 million from $1,079.08 million on Apr. 01, 2016. Current ratio was at 1.52 as on Mar. 31, 2017, down from 1.64 on Apr. 01, 2016.
Cash conversion cycle (CCC) has decreased to 123 days for the quarter from 237 days for the last year period. Days sales outstanding went down to 106 days for the quarter compared with 120 days for the same period last year.
Days inventory outstanding has decreased to 54 days for the quarter compared with 161 days for the previous year period. At the same time, days payable outstanding went down to 38 days for the quarter from 44 for the same period last year.
Debt comes down significantly Varian Medical Systems has recorded a decline in total debt over the last one year. It stood at $546.50 million as on Mar. 31, 2017, down 31.18 percent or $247.64 million from $794.14 million on Apr. 01, 2016. Total debt was 17.52 percent of total assets as on Mar. 31, 2017, compared with 20.54 percent on Apr. 01, 2016. Debt to equity ratio was at 0.42 as on Mar. 31, 2017, down from 0.47 as on Apr. 01, 2016.
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