07.27.10
29. Varian Medical Systems
$2.2 Billion
KEY EXECUTIVES:
Timothy E. Guertin, President and CEO
Dow R. Wilson, Corporate Exec. VP and President, Oncology Systems
Elisha W. Finney, Corporate Sr. VP, Finance and Chief Financial Officer
Robert H. Kluge, Corporate Sr. VP and President, X-ray Products
Tai-yun Chen, Corporate VP, Finance and Corporate Controller
John W. Kuo, Corporate VP, General Counsel and Corporate Secretary
NO. OF EMPLOYEES: 5,100
GLOBAL HEADQUARTERS: Palo Alto, Calif.
For the last several years, the growth strategy at Varian Medical Systems Inc. has revolved around three basic questions. The first is essential to any growth plan—how to get more customers interested in purchasing the company’s products.
The other questions seek input on making Varian’s products more efficient and enjoyable to use, and approaches to entice non-customers to buy its products. Finding the answer to those questions has helped Varian Medical executives grow the business from $1.6 billion in fiscal 2006 to $2.2 billion in fiscal 2009 (year ended Oct. 2).
Remarkably, Varian’s question-and-answer growth strategy even fostered expansion during one of the most severe recessions on record. The company posted a 3 percent gain in net orders to $2.4 billion, a 13 percent increase in operating earnings to $474 million and a 35 percent jump in working capital to $830 million. Additionally, net earnings totaled $319 million, a 12 percent increase compared with the $279.5 million the company posted in fiscal 2008 (year ended Sept. 26, 2008), and net earnings per diluted share improved 15 percent to $2.65.
By the end of fiscal 2009, the company had grown its net order backlog by 9 percent to $2.1 billion, and built up its cash position to a solid $554 million. Plus, stockholders’ equity skyrocketed 28 percent to $1.3 billion. “We entered fiscal year 2010 in a very strong financial position,” President and CEO Timothy E. Guertin said in a letter within the firm’s 2009 annual report.
That position was enhanced by a 2 percent workforce reduction and significant decreases in capital expenditures across the company’s three business segments. Revenue increases in two of the segments also gave the company the financial vitality it needed to sustain growth through fiscal 2010.
Revenue grew the most in Varian’s X-ray products segment, which posted $339 million in net orders and a backlog of $121 million. Revenue climbed 9 percent to $331 million, while operating earnings jumped 12.3 percent to $82 million. The segment overcame a significant drop in orders during the second and third fiscal quarters, when X-ray equipment manufacturers reduced inventories of X-ray tubes and flat-panel detectors due to the recession. Executives said the firm’s flat-panel products represented more than 40 percent of the segment’s net orders for the fiscal year.
Other growth drivers of X-ray products revenue in fiscal 2009 included the On-Board Imager image-guidance system for targeted radiotherapy. In October 2008, the company marked the 1,000th installation of the On-Board Imager at Kantonsspital in Lucerne, Switzerland.
The firm also introduced the PaxScan 3030+, a digital imager that features speeds up to 30 frames per second. Executives claim the PaxScan allows doctors to monitor interventional procedures, including the placement of catheters within blood vessels, in real time.
Oncology systems sales grew 8 percent to $1.8 billion, while net orders totaled $1.9 billion and operating earnings shot up 17 percent to $482 million. Though it was not apparent in the segment’s overall financial performance, executives said the Oncology division was adversely affected by capital equipment budget reductions at North American hospitals, uncertainty over healthcare reform in the United States, and a proposal from the U.S. government to cut reimbursement rates at freestanding clinics by up to 40 percent.
“The troubles in North America during fiscal 2009 overshadowed many successes for our Oncology Systems business,” Guertin said. “Annual orders in the international market rose by 11 percent, or 16 percent on a constant currency basis. Europe, Asia and Latin America all contributed to this growth, demonstrating there is a demand for cancer-fighting products in underequipped regions.”
Growth drivers of Oncology systems products revenue in fiscal 2009 included the Novalis Tx radiosurgery platform, the RapidArc two-minute radiation therapy treatment system (more than 270 were installed by fiscal year’s end) and the Unique low-energy accelerator during fiscal 2009, a device that can deliver fast, image-guided RapidArc treatments. The company also received 510(k) clearance from the U.S. Food and Drug Administration for its Acuros radiotherapy treatment system, which enables clinicians to rapidly calculate patient doses of radiation at an extremely high rate of speed.
The acquisition last summer of Houston, Texas-based IKOEmed and IKOEtech, privately-owned suppliers of software used in the planning of radiotherapy and radiosurgery treatments, certainly helped the company add to its bottom line in fiscal 2009. The company spent $2 million to acquire the IKOE assets.
Varian’s “Other Businesses” category includes the firm’s Security and Inspection products group, the Varian Particle Therapy business, and the Ginzton Technology Center, which conducts research and development projects that support all the company’s business units. The Other Business category posted an 8.6 percent decline in revenue to $85 million, an operating earnings loss of $19 million, and a more than five-fold drop in capital expenditures to $3 million. Net orders, however, rose 60 percent to $151 million and its backlog nearly doubled to $143 million.
$2.2 Billion
KEY EXECUTIVES:
Timothy E. Guertin, President and CEO
Dow R. Wilson, Corporate Exec. VP and President, Oncology Systems
Elisha W. Finney, Corporate Sr. VP, Finance and Chief Financial Officer
Robert H. Kluge, Corporate Sr. VP and President, X-ray Products
Tai-yun Chen, Corporate VP, Finance and Corporate Controller
John W. Kuo, Corporate VP, General Counsel and Corporate Secretary
NO. OF EMPLOYEES: 5,100
GLOBAL HEADQUARTERS: Palo Alto, Calif.
For the last several years, the growth strategy at Varian Medical Systems Inc. has revolved around three basic questions. The first is essential to any growth plan—how to get more customers interested in purchasing the company’s products.
The other questions seek input on making Varian’s products more efficient and enjoyable to use, and approaches to entice non-customers to buy its products. Finding the answer to those questions has helped Varian Medical executives grow the business from $1.6 billion in fiscal 2006 to $2.2 billion in fiscal 2009 (year ended Oct. 2).
Remarkably, Varian’s question-and-answer growth strategy even fostered expansion during one of the most severe recessions on record. The company posted a 3 percent gain in net orders to $2.4 billion, a 13 percent increase in operating earnings to $474 million and a 35 percent jump in working capital to $830 million. Additionally, net earnings totaled $319 million, a 12 percent increase compared with the $279.5 million the company posted in fiscal 2008 (year ended Sept. 26, 2008), and net earnings per diluted share improved 15 percent to $2.65.
By the end of fiscal 2009, the company had grown its net order backlog by 9 percent to $2.1 billion, and built up its cash position to a solid $554 million. Plus, stockholders’ equity skyrocketed 28 percent to $1.3 billion. “We entered fiscal year 2010 in a very strong financial position,” President and CEO Timothy E. Guertin said in a letter within the firm’s 2009 annual report.
That position was enhanced by a 2 percent workforce reduction and significant decreases in capital expenditures across the company’s three business segments. Revenue increases in two of the segments also gave the company the financial vitality it needed to sustain growth through fiscal 2010.
Revenue grew the most in Varian’s X-ray products segment, which posted $339 million in net orders and a backlog of $121 million. Revenue climbed 9 percent to $331 million, while operating earnings jumped 12.3 percent to $82 million. The segment overcame a significant drop in orders during the second and third fiscal quarters, when X-ray equipment manufacturers reduced inventories of X-ray tubes and flat-panel detectors due to the recession. Executives said the firm’s flat-panel products represented more than 40 percent of the segment’s net orders for the fiscal year.
Other growth drivers of X-ray products revenue in fiscal 2009 included the On-Board Imager image-guidance system for targeted radiotherapy. In October 2008, the company marked the 1,000th installation of the On-Board Imager at Kantonsspital in Lucerne, Switzerland.
The firm also introduced the PaxScan 3030+, a digital imager that features speeds up to 30 frames per second. Executives claim the PaxScan allows doctors to monitor interventional procedures, including the placement of catheters within blood vessels, in real time.
Oncology systems sales grew 8 percent to $1.8 billion, while net orders totaled $1.9 billion and operating earnings shot up 17 percent to $482 million. Though it was not apparent in the segment’s overall financial performance, executives said the Oncology division was adversely affected by capital equipment budget reductions at North American hospitals, uncertainty over healthcare reform in the United States, and a proposal from the U.S. government to cut reimbursement rates at freestanding clinics by up to 40 percent.
“The troubles in North America during fiscal 2009 overshadowed many successes for our Oncology Systems business,” Guertin said. “Annual orders in the international market rose by 11 percent, or 16 percent on a constant currency basis. Europe, Asia and Latin America all contributed to this growth, demonstrating there is a demand for cancer-fighting products in underequipped regions.”
Growth drivers of Oncology systems products revenue in fiscal 2009 included the Novalis Tx radiosurgery platform, the RapidArc two-minute radiation therapy treatment system (more than 270 were installed by fiscal year’s end) and the Unique low-energy accelerator during fiscal 2009, a device that can deliver fast, image-guided RapidArc treatments. The company also received 510(k) clearance from the U.S. Food and Drug Administration for its Acuros radiotherapy treatment system, which enables clinicians to rapidly calculate patient doses of radiation at an extremely high rate of speed.
The acquisition last summer of Houston, Texas-based IKOEmed and IKOEtech, privately-owned suppliers of software used in the planning of radiotherapy and radiosurgery treatments, certainly helped the company add to its bottom line in fiscal 2009. The company spent $2 million to acquire the IKOE assets.
Varian’s “Other Businesses” category includes the firm’s Security and Inspection products group, the Varian Particle Therapy business, and the Ginzton Technology Center, which conducts research and development projects that support all the company’s business units. The Other Business category posted an 8.6 percent decline in revenue to $85 million, an operating earnings loss of $19 million, and a more than five-fold drop in capital expenditures to $3 million. Net orders, however, rose 60 percent to $151 million and its backlog nearly doubled to $143 million.