07.26.17
$3.2 Billion
KEY EXECUTIVES:
Dow R. Wilson, President and CEO
Elisha W. Finney, Exec. VP, Finance and CFO
Kolleen T. Kennedy, Exec. VP and President, Oncology Systems
Sunny Sanyal, Sr. VP and President, Imaging Components Business
Jessica L. Denecour, Sr. VP and Chief Information Officer
Moataz Karmalawy, VP and General Manager, Particle Therapy
NUMBER OF EMPLOYEES: 7,800
GLOBAL HEADQUARTERS: Palo Alto, Calif.
Over 70 percent of cancer patients require radiation therapy as a part of their treatment. Unfortunately, in this case, that which treats can also harm, because excess radiation is poisonous to healthy tissue. This isn’t detrimental to cancer patients in developed countries such as the United States, where precise radiotherapy machines offering image-guided treatments help minimize the risk of destroying healthy tissue. But hospitals and treatment centers in developing countries often lack the necessary resources for even the most basic radiotherapy machines, let alone advanced (and quite expensive) radiotherapy systems. Ethiopia, for example, had merely a single cobalt treatment unit to support its population of over 90 million. Discontented with this meager offering, the Ethiopian government proposed the first phase of a cancer plan, which involved installation of Varian Clinac iX treatment systems across the country.
Varian happily accepted, and the order was swiftly placed for six treatment machines in Ethiopian University hospitals in Harar, Mek’ele, Jima, Hawasa, Gondar, and the capital Addis Ababa. Clinac iX systems will be a quantum leap for Ethiopian cancer care—the machines boast fast and precise treatments with image-guidance tools that greatly minimize radiation damage to healthy tissue. Each site will also receive a treatment planning system, oncology information management workstations, and two radiotherapy bunkers to facilitate future expansion. The machines stand poised to completely revamp Ethiopian cancer treatment, as well as boost Ethiopian healthcare professionals’ clinical intelligence.
“A modern linear accelerator will be so important for our center,” Dr. Mathewos Assefa Woldegeorgis of Black Lion University Hospital in Addis Ababa said when Varian announced the plan. “This machine will also help in the training of health professionals such as radiation oncologists, radiotherapists, and medical physicists.”
Varian is no stranger to delivering its advanced cancer care across the globe. That same month, Varian equipped the Turkish cities of Mersin and Ankara with two of its TrueBeam radiotherapy systems and the country’s first VitalBeam radiotherapy system. Two months later, Bolivia’s Instituto Oncologico del Oriente Boliviano was on the receiving end of a Clinac iX accelerator, as well as a two-day seminar for clinicians and radiation therapists to learn how to operate the device.
“A lack of investment in radiotherapy services in the past has severely limited access to radiotherapy treatments worldwide,” Varian’s president of Oncology Systems Americas, Chris Toth, said when Varian announced the installation. “We are proud to be working with Instituto Oncologico del Oriente Boliviano, and making this advanced cancer fighting treatment available to a wider range of patients in Bolivia.”
ANALYST INSIGHTS: The introduction of its new Halcyon platform has raised industry eyebrows as this product has the potential to continue to rapidly expand its market share in oncology. Two keys for performance for Varian this year and beyond will be (1) the acceptance and adoption of the Halcyon system; and (2) the growth of its emerging market presence.
Varian holds the claim to fame for developing the first medical linear accelerator. Since then, the company has developed a portfolio of technologies to treat and manage cancer, including equipment for radiotherapy, radiosurgery, brachytherapy, and proton therapy. Varian also produces the software to accompany its machines for care coordination, treatment planning, and clinical operations management. Its TrueBeam, Edge, and VitalBeam systems for radiotherapy and radiosurgery employ beam shaping, image guidance, and motion management technologies to deliver radiation doses that closely match the size, shape, and location of tumors while protecting surrounding tissues from radiation.
Varian’s Oncology Systems business, which includes the aforementioned linear accelerators and software as well as brachytherapy afterloaders and treatment simulation, has historically made up the bulk of the company’s earnings, and the tradition continued in FY 2016 (ended Sept. 30). Oncology Systems contributed 76 percent of Varian’s $3.2 billion 2016 revenue (which was a 3.8 percent rise over the previous year), expanding by $113 million from 2015.
That 5 percent revenue bump primarily resulted from increased hardware product sales stimulated by a strong product mix, accompanied by a rise in software licenses. Service revenues also showed a small climb of 4 percent from the previous year because of increased adoption of TrueBeam systems service contracts. Though sales were up in each region, the business was heavily fueled by an impressive 13 percent expansion in the APAC (Asia-Pacific) market.
Oncology Systems introduced the 360 Oncology care management platform in September 2016. It’s the first software system designed to integrate and coordinate key cancer care elements by bringing radiation, medical and surgical oncology, social services, primary care physicians, and the patient together in a single platform. The platform enables a dashboard view of clinical and operational data that can be shared in electronic medical records (EMRs), oncology information systems for both radiation and medical oncology, and other point-of-care solutions, such as PACS and lab systems, to achieve a full 360-degree view (hence the name) of patient data.
Though it makes up just 5 percent of total earnings, Varian’s “Other” business category, which includes proceeds from proton therapy systems for cancer treatment and the GTC scientific research facility, jumped 13 percent from the previous year with $163 million in revenue. This is mainly due to the continued production and installation of VPT (Varian Particle Therapy) projects in the company’s backlog. The division is expected to further expand its strength due to the October 2015 CE marking of the newest version of the ProBeam Proton Therapy System. ProBeam gives clinicians the ability to deliver a dose precisely in order to minimize exposure to healthy tissue. It touts high-speed intensity modulated proton therapy (IMPT), the most precise form of proton therapy available, enabling modulation of the dose on a spot-by-spot, layer-by-layer basis throughout the treatment area.
Varex Leaves the Nest
Varian’s former (to be explained in a moment) Imaging Components business designed, manufactured, sold, and serviced X-ray imaging components for a range of applications, including radiographic or fluoroscopic imaging, mammography, special procedures, computed tomography (CT), computer-aided diagnostics, and industrial applications. The business has struggled over the past few years, decreasing 7 percent in revenue from 2014 to 2015, and again by 2 percent from 2015 to 2016. The loss in FY16 was attributed to falling sales from flat panel and X-ray tube products due to customer migration to lower-cost alternatives, and one customer’s decision to insource some of its flat panel products in the second half of FY15.
The flattening revenues prompted Varian to spin off its Imaging Components business into a new publicly traded company, Varex Imaging. Varex’s creation was announced in May 2016, and the spinoff was completed in January 2017.
“The spinoff will create two strong, independent companies,” Varian CEO Dow Wilson said in a release detailing the separation. “It will enable Varian to focus on expanding its position as a global cancer company with leading technology and services. It will empower the new company to grow as a global leader in components, software, and services for expanded imaging applications and markets.”
The separation is expected to maximize growth opportunities—particularly in Asia—and develop applications for its components as X-ray imaging continues to transition into digital systems. The spinoff hopes to establish the new company as a leading global supplier of components, software, and engineering services for imaging equipment manufacturers and system integrators in the diagnostics, dentistry, veterinary care, security, and industrial inspection industries.
“This business will be able to capitalize on trends in digital imaging and build a larger presence in security and industrial applications,” Wilson continued. “The new company will be able to leverage its world-renowned X-ray engineering team to work with equipment manufacturers and system integrators to develop new, next-generation imaging systems.”
Varex is predicted to achieve annual revenues of $575 million, with a workforce of 1,300 people. The new company leverages a nearly $600 million business that Varian has been growing since 1999. Sunny Sanyal, previously president of the Imaging Components business, will head Varex as its new CEO. Former Varian controller Clarence Verhoef will assume the role of chief financial officer.
“We are very pleased that we were able to complete this successful separation and create two strong independent companies,” Wilson said in the release proclaiming Varex’s successful split. “Varian is now focused exclusively on expanding its position as the leader in systems and software for the treatment of cancer. As a cancer-fighting company we are increasing our efforts to make the treatment of cancer more effective, affordable, and accessible for patients around the world.”
KEY EXECUTIVES:
Dow R. Wilson, President and CEO
Elisha W. Finney, Exec. VP, Finance and CFO
Kolleen T. Kennedy, Exec. VP and President, Oncology Systems
Sunny Sanyal, Sr. VP and President, Imaging Components Business
Jessica L. Denecour, Sr. VP and Chief Information Officer
Moataz Karmalawy, VP and General Manager, Particle Therapy
NUMBER OF EMPLOYEES: 7,800
GLOBAL HEADQUARTERS: Palo Alto, Calif.
Over 70 percent of cancer patients require radiation therapy as a part of their treatment. Unfortunately, in this case, that which treats can also harm, because excess radiation is poisonous to healthy tissue. This isn’t detrimental to cancer patients in developed countries such as the United States, where precise radiotherapy machines offering image-guided treatments help minimize the risk of destroying healthy tissue. But hospitals and treatment centers in developing countries often lack the necessary resources for even the most basic radiotherapy machines, let alone advanced (and quite expensive) radiotherapy systems. Ethiopia, for example, had merely a single cobalt treatment unit to support its population of over 90 million. Discontented with this meager offering, the Ethiopian government proposed the first phase of a cancer plan, which involved installation of Varian Clinac iX treatment systems across the country.
Varian happily accepted, and the order was swiftly placed for six treatment machines in Ethiopian University hospitals in Harar, Mek’ele, Jima, Hawasa, Gondar, and the capital Addis Ababa. Clinac iX systems will be a quantum leap for Ethiopian cancer care—the machines boast fast and precise treatments with image-guidance tools that greatly minimize radiation damage to healthy tissue. Each site will also receive a treatment planning system, oncology information management workstations, and two radiotherapy bunkers to facilitate future expansion. The machines stand poised to completely revamp Ethiopian cancer treatment, as well as boost Ethiopian healthcare professionals’ clinical intelligence.
“A modern linear accelerator will be so important for our center,” Dr. Mathewos Assefa Woldegeorgis of Black Lion University Hospital in Addis Ababa said when Varian announced the plan. “This machine will also help in the training of health professionals such as radiation oncologists, radiotherapists, and medical physicists.”
Varian is no stranger to delivering its advanced cancer care across the globe. That same month, Varian equipped the Turkish cities of Mersin and Ankara with two of its TrueBeam radiotherapy systems and the country’s first VitalBeam radiotherapy system. Two months later, Bolivia’s Instituto Oncologico del Oriente Boliviano was on the receiving end of a Clinac iX accelerator, as well as a two-day seminar for clinicians and radiation therapists to learn how to operate the device.
“A lack of investment in radiotherapy services in the past has severely limited access to radiotherapy treatments worldwide,” Varian’s president of Oncology Systems Americas, Chris Toth, said when Varian announced the installation. “We are proud to be working with Instituto Oncologico del Oriente Boliviano, and making this advanced cancer fighting treatment available to a wider range of patients in Bolivia.”
ANALYST INSIGHTS: The introduction of its new Halcyon platform has raised industry eyebrows as this product has the potential to continue to rapidly expand its market share in oncology. Two keys for performance for Varian this year and beyond will be (1) the acceptance and adoption of the Halcyon system; and (2) the growth of its emerging market presence.
—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors
Varian holds the claim to fame for developing the first medical linear accelerator. Since then, the company has developed a portfolio of technologies to treat and manage cancer, including equipment for radiotherapy, radiosurgery, brachytherapy, and proton therapy. Varian also produces the software to accompany its machines for care coordination, treatment planning, and clinical operations management. Its TrueBeam, Edge, and VitalBeam systems for radiotherapy and radiosurgery employ beam shaping, image guidance, and motion management technologies to deliver radiation doses that closely match the size, shape, and location of tumors while protecting surrounding tissues from radiation.
Varian’s Oncology Systems business, which includes the aforementioned linear accelerators and software as well as brachytherapy afterloaders and treatment simulation, has historically made up the bulk of the company’s earnings, and the tradition continued in FY 2016 (ended Sept. 30). Oncology Systems contributed 76 percent of Varian’s $3.2 billion 2016 revenue (which was a 3.8 percent rise over the previous year), expanding by $113 million from 2015.
That 5 percent revenue bump primarily resulted from increased hardware product sales stimulated by a strong product mix, accompanied by a rise in software licenses. Service revenues also showed a small climb of 4 percent from the previous year because of increased adoption of TrueBeam systems service contracts. Though sales were up in each region, the business was heavily fueled by an impressive 13 percent expansion in the APAC (Asia-Pacific) market.
Oncology Systems introduced the 360 Oncology care management platform in September 2016. It’s the first software system designed to integrate and coordinate key cancer care elements by bringing radiation, medical and surgical oncology, social services, primary care physicians, and the patient together in a single platform. The platform enables a dashboard view of clinical and operational data that can be shared in electronic medical records (EMRs), oncology information systems for both radiation and medical oncology, and other point-of-care solutions, such as PACS and lab systems, to achieve a full 360-degree view (hence the name) of patient data.
Though it makes up just 5 percent of total earnings, Varian’s “Other” business category, which includes proceeds from proton therapy systems for cancer treatment and the GTC scientific research facility, jumped 13 percent from the previous year with $163 million in revenue. This is mainly due to the continued production and installation of VPT (Varian Particle Therapy) projects in the company’s backlog. The division is expected to further expand its strength due to the October 2015 CE marking of the newest version of the ProBeam Proton Therapy System. ProBeam gives clinicians the ability to deliver a dose precisely in order to minimize exposure to healthy tissue. It touts high-speed intensity modulated proton therapy (IMPT), the most precise form of proton therapy available, enabling modulation of the dose on a spot-by-spot, layer-by-layer basis throughout the treatment area.
Varex Leaves the Nest
Varian’s former (to be explained in a moment) Imaging Components business designed, manufactured, sold, and serviced X-ray imaging components for a range of applications, including radiographic or fluoroscopic imaging, mammography, special procedures, computed tomography (CT), computer-aided diagnostics, and industrial applications. The business has struggled over the past few years, decreasing 7 percent in revenue from 2014 to 2015, and again by 2 percent from 2015 to 2016. The loss in FY16 was attributed to falling sales from flat panel and X-ray tube products due to customer migration to lower-cost alternatives, and one customer’s decision to insource some of its flat panel products in the second half of FY15.
The flattening revenues prompted Varian to spin off its Imaging Components business into a new publicly traded company, Varex Imaging. Varex’s creation was announced in May 2016, and the spinoff was completed in January 2017.
“The spinoff will create two strong, independent companies,” Varian CEO Dow Wilson said in a release detailing the separation. “It will enable Varian to focus on expanding its position as a global cancer company with leading technology and services. It will empower the new company to grow as a global leader in components, software, and services for expanded imaging applications and markets.”
The separation is expected to maximize growth opportunities—particularly in Asia—and develop applications for its components as X-ray imaging continues to transition into digital systems. The spinoff hopes to establish the new company as a leading global supplier of components, software, and engineering services for imaging equipment manufacturers and system integrators in the diagnostics, dentistry, veterinary care, security, and industrial inspection industries.
“This business will be able to capitalize on trends in digital imaging and build a larger presence in security and industrial applications,” Wilson continued. “The new company will be able to leverage its world-renowned X-ray engineering team to work with equipment manufacturers and system integrators to develop new, next-generation imaging systems.”
Varex is predicted to achieve annual revenues of $575 million, with a workforce of 1,300 people. The new company leverages a nearly $600 million business that Varian has been growing since 1999. Sunny Sanyal, previously president of the Imaging Components business, will head Varex as its new CEO. Former Varian controller Clarence Verhoef will assume the role of chief financial officer.
“We are very pleased that we were able to complete this successful separation and create two strong independent companies,” Wilson said in the release proclaiming Varex’s successful split. “Varian is now focused exclusively on expanding its position as the leader in systems and software for the treatment of cancer. As a cancer-fighting company we are increasing our efforts to make the treatment of cancer more effective, affordable, and accessible for patients around the world.”