Varex Imaging Corporation has secured a $490 million credit and guaranty agreement that will provide the company with a $350 million secured term loan, a $100 million secured revolving credit facility, and a $40 million secured delayed‑draw term loan, all maturing on March 13, 2031.
The facility is structured with a variable interest rate equal to SOFR plus a 2.50 % margin; an interest‑rate swap converts the SOFR component to a fixed 3.65 % rate, giving Varex predictable borrowing costs over the life of the agreement.
On March 16, 2026 the company redeemed $368 million of its 7.875 % Senior Secured Notes due 2027, using approximately $42 million of cash. The cash allocation included an $18 million net reduction in outstanding debt, a $7 million call premium, $12 million of accrued interest, and $5 million in transaction fees.
The refinancing is expected to lower Varex’s annualized cash interest expense by more than $7 million and reduce total debt by $18 million, thereby improving free‑cash‑flow generation and providing greater financial flexibility for future investment in its core medical, industrial, and security imaging businesses.
In its Q1 FY2026 earnings, Varex reported revenue of $210 million, a 5 % year‑over‑year increase driven by a 17 % rise in industrial segment revenue and stable medical segment sales. Non‑GAAP gross margin fell to 34 % from 35 % in the prior year, while non‑GAAP EPS of $0.19 per diluted share beat analyst expectations of $0.13, a $0.06 or 46 % upside.
CFO Sam Maheshwari said, "We are excited to have successfully closed the new credit agreement and redeemed our senior secured notes, strengthening our balance sheet and improving our cost of capital." He added, "We expect that the reduced debt and lower interest rate will improve financial flexibility, support improved free cash flow generation and enable continued investment in our core business while prioritizing long‑term shareholder value." CEO Sunny Sanyal noted, "We are pleased to report a solid start to fiscal 2026, with results toward the high‑end of guidance. First quarter revenue of $210 million, increased 5 % year‑over‑year. Growth in the quarter was driven by strength in our cargo systems business, which contributed to a 17 % year‑over‑year increase in Industrial segment revenue." He also said, "Looking ahead, we expect demand for CT products to remain strong and we are encouraged by the sustained momentum in our cargo security systems business."
The refinancing strengthens Varex’s balance sheet, reduces its cost of capital, and provides the liquidity needed to support ongoing product development and market expansion, including its planned manufacturing expansion in India and advances in photon‑counting CT technology. The deal also mitigates the impact of a recent downgrade to a B+ rating by S&P in May 2025, demonstrating lender confidence in the company’s financial strategy.
By combining a sizable credit facility with the redemption of high‑cost notes, Varex positions itself to capitalize on growth opportunities in both its medical and industrial imaging segments while maintaining a more favorable debt profile in a market that continues to face supply‑chain and geopolitical headwinds. The move is expected to enhance the company’s long‑term competitiveness and support shareholder value creation.
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