Varian Medical Spins Off Imaging Components Business
By Jof Enriquez,
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Varian Medical Systems plans to spin off its imaging components business into a new independent, publicly traded company with projected annual revenues of $574 million and 1,300 employees worldwide. The move will allow Varian to concentrate on its radiation oncology business.
The new, stand-alone company is envisioned to become a worldwide leader in the manufacture of X-ray tubes, flat panel detectors, connectors and accessories, software, and engineering services in the medical 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,” said Dow Wilson, CEO of Varian Medical Systems, in an announcement. “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.”
The spin-off will be executed via a tax-free distribution to Varian stockholders by the end of 2016 and will cost approximately $35 million. Varian Imaging Components president Sunny Sanyal will become CEO, and Varian controller Clarence Verhoef the CFO, of the new company, which will be based in Salt Lake City, Utah.
The transaction essentially splits Varian into two companies catering to high-growth device markets: imaging and oncology.
“We believe making these businesses independent will give each of them more freedom to invest in and pursue new growth strategies in their unique core markets,” said Wilson. “This should sharpen the focus of each business and align their employee incentives and performance more closely with serving the specific needs of their respective markets.”
Varian believes there is ample room for growth in the ultra-competitive global imaging components market, hence the spin-off. However, a growing cancer epidemic means there are strong opportunities in cancer treatment as well. For example, the United States market for interventional oncology (IO) devices segment alone was valued at around $3 billion in 2015.
Sans the imaging components business, Varian Medical Systems — with $2.5 billion in annual revenues and more than 6,000 employees worldwide — will now focus on providing hospitals, radiotherapy centers, and medical oncology practices with equipment, software, and services for radiotherapy, radiosurgery, brachytherapy, and proton therapy.
“We have been a cancer-fighting company for a long time and this opens the door to expanding our portfolio with additional technologies and tools for making treatment of cancer more effective, affordable and accessible for patients,” Wilson added, according to the The Salt Lake Tribune.
Image credit: Varian ProBeam system, courtesy of Varian Medical Systems