VREX 10-K & 10-Q changes, risk factors and insider trading

We had one customer during fiscal year 20242025 that accounted for 18%18.0% of our revenue.revenue, all of which was in our Medical segment. Our ten largest customers as a group accounted for approximately 53%,52%, 51%53% and 52%51% of our revenue for fiscal years 2024,2025, 20232024 and 2022,2023, respectively. Because we often take significant time to replace lost business, in the past our operating results have been, and in the future it is likely that our operating results would be, materially and adversely affected if one or more of our major OEM customers were to cancel, delay, or reduce orders.

Furthermore, we generate significant accounts receivables from the sale of our products and the provision of services directly to these customers. One customer accounted for 9.5%14.0% of our accounts receivables as of SeptemberOctober 27,3, 2024.2025. If one or more of these customers were to cancel a product order or service contract, become insolvent, or otherwise be unable or fail to pay for our products and/or services in a timely manner, our operating results and financial condition could be materially and adversely affected.

End-user product demand, economic uncertainties, the impact of pandemic diseases, natural disasters, armed conflict,conflicts, geopolitical tensions, possiblea prolonged United States government shutdown, legislative, tariffs,tariff, and trade policy reformsreforms, asincluding, for example, the tariffs announced by the United States during the calendar year 2025 and the retaliatory actions announced by a resultnumber of thecountries recentin U.S. elections, including reactionary responses to such changes from other nations, particularly China,response, potential social unrest and uncertainty resulting therefrom, government actionsinvestigations, (including, for example, the MOFCOM Investigations that have been suspended indefinitely, and before that, the Chinese government initiated anti-corruption investigations related to itsChina's healthcare industry),industry, and other matters beyond our control, make it difficult for our customers to accurately forecast and plan future business activities, which makes it difficult for us to accurately predict demand or delivery schedules for our products. Because the manufacture of our products requires some lead-time, changes in customer purchasing forecasts have previously resulted in excess inventory and slowdowns in sales, which are likely to occur again in the future. Changes to customer forecasts can occur on short notice, as our customers face inherent competitive issues, new product introduction delays, and our business and regulatory risks. Our agreements for imaging components contain purchasing estimates that are typically based on our customers’ forward-looking forecasts rather than firm commitments, and actual purchasing volumes under the agreements may vary significantly from these estimates. The variation from forecasted purchasing volume may be due, in part, to the increasing life of X-ray tubes, which can result in reduced demand for replacement X-ray tubes in ways we may not be able to accurately forecast. Reductions in purchasing patterns have in the past, and may in the future, materially and adversely affect our operating results.

We compete in industries characterized by rapidly evolving technology, intense competition and pricing pressure. We often compete with companies that have greater financial, marketing and other resources than us. Some of the major diagnostic imaging systems companies, which are the primary OEM customers for our X-ray imaging components, also manufacture X-ray imaging components, including X-ray tubes and flat panel detectors, for use in their own imaging systems products. We have experienced, and may in the future experience, decreased sales of our products to these customers if they manufacture a greater percentage of their components in-house or purchase components from external sources other than us, which has had and may in the future have an adverse effect on our business and results of operations. We have in the past made price and other concessions to maintain existing customers and attract new customers, and may have to make additional price and other concessions in the future.

In addition, we compete against other stand-alone, independent X-ray tube manufacturers for both the OEM business of major diagnostic imaging equipment manufacturers and the independent servicing business for X-ray tubes. The flat panel detectors industry is also very competitive, and we face intense competition from over a dozen smaller competitors. In our Industrial industry,business, we also compete with other OEM suppliers primarily outside of the United States. Some of our competitors outside of the United States may have resources and support from their governments that we do not, such as preferences for local manufacturers, and may not be subject to the same tariffs, trade policies, trade compliance regulations and government investigations as us.

In addition, certain costs, including installation and warranty costs, associated with new products have been, currently are, and may in the future be proportionately greater than the costs associated with existing products and have or may therefore disproportionately, materially, and adversely affect our gross and operating margins. We may also experience lower margins due to increased commodities prices, higher tariffs, and inadequate transfer pricing favoring sales to third parties over internal sales. If we are unable to lower these costs over time, our operating results could be materially and adversely affected. Some of the electronic components and integrated circuits used in our flat panel detectors are susceptible to discontinuance and obsolescence risks, which may force us to incorporate newer generations of these components, resulting in unplanned additional R&D expenses, delays in the launch of new products, supply disruptions, or inventory write-downs. Further, using aging production equipment might hamper our capacity to innovate to meet customers’ needs and demands and stay competitive. Failure to develop and adopt artificial intelligence ("AI") technology could also hinder our competitiveness and growth potential. We may also experience challenges in developing and implementing effective product and sales strategies, leading to missed opportunities and customer dissatisfaction.

We operate in business segments characterized by rapid change and technological innovation. Our customers use our products in their medical diagnostic, security, and industrial imaging systems, and we must continually introduce new products at competitive prices while also improving existing products with higher quality, lower costs, and increased features. We and our joint ventures have in the past spent, and in the future may need to spend, more time and money than we expect to develop, market, and introduce new products, product enhancements, and technologies. Even if we succeed in introducing new products, enhancements, or technologies as soon as expected, if at all, potential customers may not accept or purchase these new products, enhancements, or technologies, and we may not be able to recover all or a meaningful part of our investment. Once introduced, new products may materially and adversely impact sales of our existing products or make them less desirable or even obsolete, which could materially and adversely impact our revenues and operating results.

More than half of our revenue is currently generated from customers located outside the United States, and is subject to global, regional, and country-specific economic instability, shifting political environments, changing tax treatment, tariffs, trade wars and other risks associated with international manufacturing, operations, and sales.

Revenues generated from customers located outside the United States accounted for approximately 70%, 68%, 69%, and 69% of our total revenues during fiscal years 2025, 2024, 2023, and 2022,2023, respectively. We intend to continue to expand our presence internationally and expect to expend significant resources in doing so. Our future results have in the past, are currently, and could in the future be impacted by a variety of factors, including:

•imposition of burdensome governmental regulations, including changing data privacy laws and regulations with respect to collecting; and maintaining personally identifiable data;

•compliance with import/export laws and requirements.

We participate in joint ventures and other investments in privately held and publicly traded companies. For example, we hold a 40% ownership interest in dpiX Holding Company LLC, ourthe parent company of the major supplier of our amorphous silicon-based thin film transistor arrays for flat panels used in our digital image detectors, a 50% interest in VEC Imaging GmbH & Co. KG ("VEC"), a joint venture formed to develop technology for use in X-ray imaging components, a 75% interest in Varex Imaging Arabia LLC, a joint venture in Saudi Arabia and a minority interest in another X-ray imaging components technology company. These and other investments are subject to risk of loss of investment capital as well as losses associated with contributed or jointly developed intellectual property, or intellectual property developed at or about the same time as these investments. These types of investments are inherently risky, in some instances because customer demand and sales for the technologies or products under development may never materialize, may develop more slowly than expected, or may underperform relative to our expectations. If these companies do not succeed, we could lose or be required to write down some or all of our investment in these companies. As discussed in the risk factor "Legal proceedings may materially and adversely affect our business, results of operations, or cash flowsflows,", we may incur significant time, management resources, and costs to enforce our rights, protect our intellectual property and other assets, address disputes or legal claims that have arisen, are ongoing, or may arise in the future, and/or unwind, dispose of or terminate our arrangements with respect to these joint ventures and/or investments. There is no guarantee that the time and money invested by us in developing these projects, intellectual property, or product or product enhancements, will yield the expected returns on the anticipated timeline or at all.

Our subsidiary Varex Imaging Deutschland AG ("Varex Germany") holds a 50% interest in VEC. In August 2023, February 2024, and August 2024, the partners to the VEC joint venture filed judicial proceedings in Germany against one another disputing the validity of shareholder resolutions passed in January 2023, January 2024, and August 2024, respectively. Each party is,was, in effect, seeking to have the other party’s managing director(s) removed and to exclude the other party from the joint venture. On October 31, 2025, the court in Germany ruled that neither party had been validly excluded and that each remain parties to the joint venture. Each party has 30 days to appeal the court's decision. If either party iswere successful,to successfully appeal, the prevailing party would be required to purchase the non-prevailing party’s interest in the joint venture for an amount equal to 75% of the fair market value thereof, which amount is in dispute. In addition, in June 2024, Varex Germany filed an action in Germany for a (negative) declaratory judgment and an injunction against business damaging statements made by certain third parties, and in August 2024, October 2024 and October 2024subsequently, Varex Germany and Varex Imaging Corporation filed additional lawsuits in Germany and the United States relating to intellectual property matters, breach of contracts and other matters. The October 2024 lawsuit was subsequently voluntarily dismissed while the parties try to negotiate a settlement. These disputes, including any determinations not in Varex Germany’s favor, have diverted, are diverting, and could in the future divert management’s attention, increase our costs, and otherwise adversely impact our business, results of operations, or cash flows.

Our subsidiary Varex Imaging International AG holds a 75% interest in Varex Imaging Arabia LLC. We currently have an ongoing disputedisputes with our joint venture partner relative to the operation of the joint venture. ThisThese disputedisputes could divert management's time,time and attention, increase our costs, and otherwise adversely impact our business, results of operations, or cash flows.

Our business exposes us to potential product and other liability claims that are inherent in the manufacture, sale, installation, servicing, and support of components that are used in medical devices and other devices that deliver radiation. Because our products, through incorporation into OEMs’ systems,products are involved in the intentional delivery of radiation to the human body and other situations where people may come into contact with radiation, the possibility for significant personal injury or loss of life exists. Furthermore, if our x-ray inspection systems fail to detect the presence of bombs, explosives, weapons, contraband, or other threats to personal safety, this may lead to personal injury, loss of life, and extensive property damage. We may also be subject to warranty and damage claims for property damage, personal injury, or economic loss related to or resulting from any errors or defects in our products or the installation, servicing, or support of our products. Any accident or mistreatment could subject us to legal costs, litigation, adverse publicity, and damage to our reputation, whether or not our products or services were a factor. We are currently a party to certain products liability litigation which, if adversely determined, could have an adverse material impact on our financial results. If a product we design or manufacture were defective, we may be required to correct or recall the product and notify regulatory authorities.

We may choose to settle product liability claims against us regardless of their actual merit. A product liability action determined against us could result in adverse publicity or significant damages, including the possibility of punitive damages, and our combined financial position, results of operations, or cash flows could be materially and adversely affected.

Material shortages and delays due to inflation and other constraints have caused, and could in the future cause, us to temporarily stop production of certain products or miss opportunities to pursue additional sales of some products. We require certain raw materials, such as copper, nickel, silver, gold, lead, tungsten, iridium, rhenium, molybdenum, rhodium, niobium, zirconium, beryllium, and various high grades of steel alloy for X-ray tubes and industrial products. Worldwide demand, availability, and pricing of these raw materials have been volatile. If we are unable to obtain the materials necessary to make certain products without unreasonable cost or delay, our customers may seek alternative suppliers who are less impacted by the current tariff environment, or decide to in-source certain products or if we must pay more for certain materials, it could reduce our profit margin or otherwise have a material adverse effect on our business and financial results. Further, our competitors with greater financial resources may be better able to restructure their manufacturing and supply chains in response to geopolitical and economic trends and thereby have a competitive advantage over us.

We obtain some of the components included in our products, such as transistor arrays, cesium iodide coatings and specialized integrated circuits for flat panel detectors, X-ray tube targets and windows, housings, glass frames, high-voltage cable, bearings, and various other components, from a limited group of suppliers or from sole-source suppliers. If our suppliers cease producing these or other components, prioritize other customers, fail to provide products on our delivery timelines, are in countries subject to significant tariffs, or become unable to continue operations, we may be unable to obtain the components from other suppliers on reasonable terms or at all, and this could materially and adversely affect our business and financial results.

Risks Relating to our Information Systems and Intellectual Property and Information Systems

We market and distribute certain X-ray tubes through distributors and third-party/multi-vendor service organizations that are used as equivalent replacements for specific OEM tubes. We are subject to medical device certification and product registration laws,laws that vary by country and are subject to periodic reviews and changes by regulatory authorities in those countries. Certain of these local laws and regulations have the effect of serving as a barrier to trade and can be difficult to navigate predictably. In addition, certain countries where we sell our products require products to undergo re-registration if the product is altered in any significant way. These registration processes can be costly and time consuming, and customers may decide to purchase products from our competitors that do not have to be involved in a re-registration process. In addition, our inability to receive or renew product registrations may prevent us from marketing and/or distributing those particular products for replacement applications in the specific country.

Existing and future healthcare reforms and changes to reimbursement rates,rates may indirectly have a material adverse effect on our business and results of operations.

Environmental laws regulate many aspects of our operations, including our handling, storage, transport, and disposal of hazardous substances, such as the chemicals and materials that we use in the course of our manufacturing operations. TheyFor example, pursuant to a remediation plan related to certain hazardous volatile organic compounds present at our Salt Lake City property, we and Varian Medical Systems, Inc. ("Varian") entered into an environmental covenant with the Director of the Utah Division of Waste Management and Radiation Control on behalf of the Utah Department of Environmental Quality requiring certain remediation measures and imposing certain limitations relating to the property and the groundwater in the aquifer underlying the property, including use of the property for commercial and industrial uses only and not allowing groundwater to be used for culinary and other domestic purposes, among other limitations. Our compliance with environmental laws can also impose cleanup liabilities, including with respect to discontinued operations. Like other businesses, we may mishandle or inadequately manage hazardous substances used in our manufacturing operations and can never completely eliminate the risk of contamination or injury from certain materials that we use in our business and, therefore, we cannot completely eliminate the prospect of resulting claims and damage payments. We may also be assessed fines and/or other penalties for failure to comply with environmental laws and regulations. Insurance has provided coverage for portions of cleanup costs resulting from historical occurrences, but we do not expect to maintain insurance coverage for costs or claims that might result from any future contamination.

Pursuant to the Separation and Distribution Agreement we entered into with Varian Medical Systems, Inc. ("Varian") when we spun off from Varian, we are obligated to indemnify Varian for 20% of the cleanup liabilities related to prior corporate restructuring activities undertaken while we were a division of Varian. This includes facilities sold as part of Varian’s electron devices business in 1995 and thin film systems business in 1997. The U.S. Environmental Protection Agency (“EPA”) or third parties have named Varian as a potentially responsible party under the amended Comprehensive Environmental Response Compensation and Liability Act of 1980 (“CERCLA”), at sites to which Varian or the facilities of the businesses sold in 1995 and 1997 were alleged to have shipped waste for recycling or disposal (the “CERCLA sites”). We anticipate that we will be obligated to reimburse Varian for 20% of the liabilities of Varian related to these CERCLA sites (after adjusting for any insurance proceeds or tax benefits received by Varian). We assess this indemnification obligation quarterly with Varian and make accruals accordingly. These accruals have historically been small, but can sometimes fluctuate significantly from period to period. For example, during the second quarter of fiscal year 2023, Varian informed us of an adjustment to their estimate of their liability, which resulted in an increase in our liability of approximately $2.9 million, net of expected insurance proceeds.

The following discussion and analysis containcontains forward-looking statements relating to future events or our future financial or operating performance that involve risks and uncertainties, as set forth above under "Forward-Looking Statements." Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors described in this Annual Report on Form 10-K.

Impact of GeneralCurrent Economic and Trade Environment

WeThe remain cautious about the generalcurrent economic and trade environment as many factors remainremains dynamic and unpredictable. The uncertain outcome and effect of tariffs and reciprocal actions between the United States and other countries and its impact on the economic and geopolitical environment, supply chain and logistic challenges, and geopolitical tensions and local conflicts have contributed to, and may continue to contribute to, delayed customer purchasing decisions, increased tariff costs, higher inflation, higherfluctuations in interest rates and capital costs, increased shipping costs, supply shortages,chain disruption, increased costs of labor and materials, exchange rate volatility, increased tariffs,shipping costs, and other similar effects. Additionally, a sustained United States government shutdown could negatively impact the global economy and in turn our financial condition and results of operations.

For additional information on risks related to tariffs and trade wars, supply chain and logistics challenges, cost increases, changes in U.S. and worldwide economic conditions, geopolitical tensions, and other risks that could impact our results, see Item 1A "“Risk Factors"”.

Our fiscal year is the 52- or 53-week periodperiods ending on the Friday nearest September 30. Fiscal year 2025 was the 53-week period that ended October 3, 2025, fiscal year 2024 was the 52-week period that ended September 27, 2024, and fiscal year 2023 was the 52-week period that ended September 29, 2023, and fiscal year 2022 was the 52-week period that ended September 30, 2022.2023.

For a discussion and analysis of our year-over-year changes, financial condition, and results of operations for the fiscal years ended September 29,27, 20232024 and September 30,29, 20222023 refer to Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our annual report on Form 10-K for the fiscal year ended September 29,27, 2023,2024, filed with the SEC on November 16,19, 2023.2024. Our year-over-year changes, financial condition, and results of operations for the fiscal years ended October 3, 2025 and September 27, 2024 and September 29, 2023 are set forth below.

Medical revenues decreasedincreased $91.6$10.9 million in fiscal year 20242025 compared to 2023fiscal year 2024, primarily due to lowerincreased sales of CT, oncology, and mammography of $24.6 million, partially offset by decreased sales in ourradiography, China business, as well as decreased sales of fluoroscopy, oncology,veterinary, and dental applications.modalities of $13.7 million.

Industrial revenues increased $9.2$22.7 million in fiscal year 2025 compared to fiscal year 2024, primarily due to increased sales of security inspection products and industrialX-ray tubes.tubes of $15.3 million, digital detectors of $6.0 million and other components of $1.4 million.

RevenuesRevenues, net by Region

The Medical segment gross profit decreasedincreased $28.8$23.4 million in fiscal year 20242025 compared to 2023fiscal year 2024 primarily due to increased sales volume, increased favorable product mix, and lower volumesmaterial costs of X-ray$13.3 tubesmillion and digitalimproved detectors.productivity of $10.1 million.

The Industrial segment gross profit decreasedincreased $4.6$10.2 million in fiscal year 20242025 compared to 2023fiscal year 2024, primarily asdue ato resultimproved sales volume and favorable product mix of decreased$20.1 volumes of digital detectors,million, partially offset by andecreased increaseproductivity inand theincreased salematerial costs of security$9.9 inspection products.million.

Selling, GeneralGeneral, and Administrative

Selling, generalgeneral, and administrative expenses as a percentage of total revenues increased to 17.0% for fiscal year 20242025 from 14.4% for fiscal year 2023decreased primarily due to decreaseda revenue,decrease increasedin fixed cost commitments to a supplier,supplier increasedof litigation$3.5 costs,million and increasedamortization severanceof costs,intangibles of $3.0 million, partially offset by loweran intangibleincrease assetin amortizationdepreciation expense.costs of $1.2 million.

The following table summarizes ourthe Company’s interest and other expense, net:

Interest income increased in fiscal year 2024 compared to fiscal year 2023 primarily due to an increase in the average cash and cash equivalents balance ofbeing investmentsheld in marketableinterest debtbearing securitiesdeposit accounts during fiscal year 20242025 whenas compared to the average balance during fiscal year 2023.2024.

Taxes on Income (Loss)

We had an income tax expense of $52.2$10.7 million and an income tax benefitexpense of $17.4$53.3 million, resulting in effective rates of 1,044.0%(18.1)% and (55.6)%,1,066.0%, for fiscal years 20242025 and 2023,2024, respectively.

We assess our liquidity in terms of our ability to generate cash to fund our operations, including working capital and investing activities. We believe that our operating cash flow, cash on our balance sheet, availability under our Revolving Credit Facility and Equipment Credit Facility, and our ability to access the credit and capital markets are sufficient to meet our anticipated operating activities and cash commitments for at least the next 12 months and will be sufficient to allow us to continue to invest in our existing businesses, consummate strategic acquisitions, and manage our capital structure on a short-term and long-term basis. We are currently not aware of any trends or demands, commitments, events, or uncertainties that will result in or that are reasonably likely to result in a material change to our liquidity needs during orthe beyondnext 12 months. Beyond the next 12 months, exceptour forSenior $200.0Secured millionNotes mature in October 2027. As of ourOctober Convertible3, Notes2025, that become due in June 2025 that we currently anticipate refinancing using some combination of future borrowings under our Revolving Credit Facility and cash. Thethe availability under our Revolving Credit Facility andwas Equipment Credit Facility is $155.0 million and $20.0$154.8 million, respectively. As of September 27, 2024, our Revolving Credit Facility and Equipment Credit Facility remain undrawn. At September 27, 2024 we had total debt of $443.4$367.5 million, net of discounts and deferred issuance costs of $3.2$2.4 million.

Net cash provided by operating activities. Cash provided by operating activities was $41.7 million and $47.3 million for fiscal years 2025 and 2024, respectively. Net cash provided by operating activities wasdecreased $47.3 million and $108.4$5.6 million for the fiscal yearsyear 20242025 and 2023, respectively. The decrease in cash provided by operating activities was primarily duecompared to a decrease in net income and a decrease in cash inflows for inventory and prepaid expenses and other assets, partially offset by decreased payments for accounts payable during fiscal year 2024. Significant changes in operating assets and liabilities affecting cash flows during these periods included:

Net cash provided by (used in) investing activities. Cash provided by (used in) investing activities was $27.5$10.3 million and $44.9$(27.5) million for the fiscal years 20242025 and 2023,2024, respectively. The decreaseincrease in cash usedprovided inby investing activities was primarily due to the implementation of an investment strategy to increase the Company’s cash balance to pay down the outstanding Convertible Notes that matured and were repaid in full during the third quarter of fiscal year 2025. This strategy resulted in lower purchases of short-term marketable securities and CDs of $30.4 million, increased proceeds from thematurities maturitiesand sales of marketable debt securities, partially offset by increased purchasessecurities of marketable$4.8 securities,million, increasedand lower purchases of property, plant, and equipment, and the settlementequipment of net$4.0 investment hedges in the prior year.million.

Net cash used in financing activities. Net cash used in financing activities was $3.3$75.9 million and $0.2$3.3 million for the fiscal years 20242025 and 2023,2024, respectively. The decreaseincrease in cash used in financing activities was primarily due to increasedthe cashrepayment paymentsin related to debt issuance costs and taxes for net share settlementfull of equitythe awards,Convertible Notes of $200.0 million, partially offset by reducedthe repaymentsissuance of borrowingsthe whenSenior comparedSecured toNotes Add On of $126.9 million during the first quarter of fiscal year 2023.2025.

Trade accounts receivable days sales outstanding (“DSO”) was 7062 days and 6570 days at SeptemberOctober 27,3, 20242025 and September 29,27, 2023,2024, respectively. Our accounts receivable and DSO are impacted by a number of factors, including the timing of product shipments, collections performance, payment terms, the mix of revenues from different regions and the effects of economic instability.

The following table summarizes, as of SeptemberOctober 27,3, 2024,2025, the total amount of future payments due in various future periods:

In October 2013, we entered into an amended agreement with dpiX and other parties that, among other things, provides us with the right to 50% of dpiX’s total manufacturing capacity produced after January 1, 2014. The amended agreement requires us to pay for 50% of the fixed costs (as defined in the amended agreement), as determined at the beginning of each calendar year. For the remainder of calendar year 2024, we estimate that we have fixed cost commitments of $3.1 million related to this amended agreement. The fixed cost commitment for future periods will be determined and approved by the dpiX board of directors at the beginning of each calendar year. In January 2025, the Company's fixed cost commitment was determined to be $13.7 million for calendar year 2025. For the remainder of calendar year 2025, we estimate that we have fixed cost commitments of $3.4 million related to this amended agreement. The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).

In OctoberAugust 2015, pursuant to a Domination and Profit and Loss Transfer Agreement (the “MeVis AgreementDPLTA”), we committed to grantpay the noncontrolling shareholders of MeVis: (1)Medical an annual recurring net compensation of €0.95 per MeVis share; and, (2) a put right for their MeVis shares at €19.77 per MeVisMedical share. The annual net payment will continue for the life of the MeVis Agreement,DPLTA, which we anticipate will continue for as long as we remain as the controlling shareholder of MeVis.MeVis Medical. As of SeptemberOctober 27,3, 2024,2025, noncontrolling shareholders together held approximately 0.5 million shares of MeVis,MeVis Medical, representing 26.3% of the outstanding shares.

The Company enters into purchase agreements with its suppliers in the ordinary course of its business for the purchase of goods and services. Some of these purchase agreements are non-cancellable and thus contractually obligate us to future cash payments. As of October 3, 2025, our non-cancellable supplier purchase obligations totaled $3.0 million.

Our operations and facilities, past and present, are subject to environmental laws, including laws that regulate the handling, storage, transport and disposal of hazardous substances. Certain of those laws impose cleanup liabilities under certain circumstances. In connection with those laws and certain of our past and present operations and facilities, we are obligated to indemnify Varian for the cleanup liabilities related to prior corporate restructuring activities. As of SeptemberOctober 27,3, 2024,2025, our estimated environmental liability for these sites is $3.9$3.2 million, net of expected insurance proceeds. For further discussion regarding our environmental obligation, see Note 1, Summary of Significant Accounting Policies, included in the accompanying Notes to the Consolidated Financial Statements.

From time to time, we are a party to or otherwise involved in legal proceedings, government inspections, investigations, customs and duty audits, and other claims and contingency matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. We accrue amounts for probable losses, to the extent they can be reasonably estimated, that we believe are adequate to address any liabilities related to legal proceedings as well as other loss contingencies that we believe will result in a probable loss (including, among other things, probable settlement value). A loss or a range of loss is disclosed when it is reasonably possible that a material loss will be incurred and can be estimated or when it is reasonably possible that the amount of a loss, when material, will exceed the recorded provision. We did not have any material contingent liabilities as of SeptemberOctober 27,3, 20242025 and September 29,27, 2023.2024. Legal expenses are expensed as incurred.

We periodically review our accounting policies, estimates, and assumptions and make adjustments when facts and circumstances dictate. Such accounting policies require us to use judgments, often as a result of the need to make estimates and assumptions regarding matters that are inherently uncertain, and actual results could differ materially from these estimates. Our critical accounting policies that are affected by accounting estimates include valuation of inventories, assessment of recoverability of goodwill and intangible assets, and income taxes. Note 1, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements, Item 88. "Financial Statements and Supplementary Data" describesdescribe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. For a discussion of how these estimates and other factors may affect our business, see Item 1A. “Risk Factors.”

In fiscal years 20232024 and 2022,2023, we performed the annual goodwill qualitative impairment test for our two reporting units and determined that, at those times, it was not more likely than not that the fair values of the reporting units were less than their carrying amounts and accordingly recorded no impairment. We performed the annual goodwill analysis as of the first day of the fourth quarter of each fiscal year (using balances as of the end of the third quarter of that fiscal year). Significant changes in our projections of our operating results or other factors could cause us to make interim assessments of impairment in any quarter that could result in some or all of the goodwill being impaired. A future impairment charge for goodwill could have a material effect on the Company's consolidated financial position and results of operations.

In thefiscal fourthyear quarter of 2024,2025, changes in facts and circumstances related to reduced demand of the Company's medical products, coupled with a sustained decrease in the Company'sour stock price, a decrease in our market capitalization, and downward revisions in our longer term forecast, which included the impact of tariffs and the MOFCOM initiating two investigations related to medical products imported into China resulted in theour Companymanagement determining that an indicator of possible impairment existed within itsour reporting units. Accordingly, the Companywe performed a quantitative impairment analysis to determine the fair values of those reporting units, using both an income approach utilizing the discounted cash flow method and a market approach utilizing the public company market multiple method. Based on the output of the analysis, the Companywe determined that the faircarrying valuesamount of bothour Medical reporting unit exceeded its fair value. Accordingly, we recorded a $93.9 million impairment charge to our Medical reporting unit within impairment of goodwill in the MedicalConsolidated andStatements Industrialof reporting units exceeded their carrying amounts. Accordingly, no impairment charges were recordedOperations during the yearfiscal quarter ended SeptemberJuly 27,4, 2024.2025. Refer to Note 5, Goodwill and Intangible Assets, of our Consolidated Financial Statements for additional information. Significant changes in our projections of our operating results or other factors could cause us to make interim assessments of impairment in any quarter that could result in some or all of the goodwill being impaired. A future impairment charge for goodwill could have a material effect on the Company's consolidated financial position and results of operations.

We calculate income taxes based on the tax statutes, regulations, and case law of the various jurisdictions in which we operate. Significant judgment is required in determining the timing and amounts of deductible and creditable items. The benefits of uncertain tax positions are recorded in our financial statements only after determining it is more likely than not that the uncertain tax positions would withstand challenge by taxing authorities. We periodically reassess our positions and record any changes in the financial statements as appropriate. Gross uncertain tax positions, exclusive of interest and penalties, were $1.6$1.3 million and $1.4$1.6 million as of October 3, 2025, and September 27, 2024, and September 29, 2023, respectively. We believe the resolution of these matters will not materially affect our consolidated financial statements. Income taxes are described further in Note 16,12, Taxes on Income,Income (Loss), in our Notes to the Consolidated Financial Statements.

The assessment regarding whether a valuation allowance is required or should be adjusted is based on an evaluation of possible sources of taxable income and also considers all available positive and negative evidence factors. Our accounting for the valuation of deferred tax assets represents our best estimate of future events. Changes in our current estimates, due to unanticipated business conditions, governmental legislative actions or events, could have a material effect on our ability to utilize deferred tax assets. The valuation allowance balances were $74.7$79.4 million and $18.7$74.7 million as of SeptemberOctober 27,3, 20242025 and September 29,27, 2023,2024, respectively. Refer to Note 16,12, Taxes on Income,Income (Loss), of our consolidatedConsolidated financialFinancial statementsStatements for additional information on the composition of valuation allowances.

Investing in Varex Imaging Corporation common stock involves risks, and the following risk factors and other information included in this Quarterly Report on Form 10-Q (this "Quarterly Report") under Part I, Item 2 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and Part I, Item 3 "Quantitative and Qualitative Disclosures about Market Risk" should be carefully considered. Although the risk factors described below are the ones management deems significant, additional risks and uncertainties that are not presentlycurrently known to us or that are presently known to us that we presentlycurrently deem not materialimmaterial, may also adversely affect our business operations.

We are both a global importer of raw materials that are used in our finished products and an exporter of finished goods to our customers worldwide. Our products are integrated into the systems and products of our OEM customers, as well as into our own industrial systems. Tariffs, trade wars, import/export restrictions, boycotts, embargoes, government investigations, trade policiespolicies, and compliance matters have in the past limited, are currently limiting, and in the future could limit our ability and our customers' ability to compete, which could cause our long-term prospects in such countries to suffer.compete. Tariffs on imported materials have increased our costs and prices and lowered gross margins on some of our products, thereby having a direct adverse impact on our business and results of operations. Retaliatoryretaliatory tariffs have increased our customers’ costs for products exported from the United States, which has caused us to make, and may in the future require us to make, price and other concessions onor some products and has caused, and may in the future cause, somecause customers to reduce or stop purchasing our products.

Increasing tensions between countries, such as China and Taiwan, and other conflicts including the Ukraine-Russia war, the conflict involving the United States and Israel conflict with Iran, as well as other Middle East conflicts, may lead theto Unitednew Statesor and/expanded tariffs, sanctions, boycotts, embargoes, export controls, or other countriesrestrictions to impose new tariffs and sanctions or expand existing tariffs and sanctions, enact boycotts and embargoes, and otherwise seek to limit or stopon the flow of goods to or from involved countries.goods. Such conflicts have caused, are causing, and could in the future cause, significantcause disruptions in the regions and industries we serve and in ourserve, supply chain,chain asdisruption, wellincreased as decrease demand from customerscosts for the ultimate products using our solutions. The current conflict in Iran, for example, has and may continue to cause increases in cost of goods andgoods, raw materials, transportation,transportation and otherlogistics, costs.reduced Tensionscustomer demand and conflicts between countries, including those discusseddelays in this risk factor, have in the past, are currently, and may in the future continue to, adversely impact our costs, margins, supply chain, and ability to timely deliver products to our customers, and these risks could continue to harm our business, financial condition, and results of operations.products.

We sell our products and services to a limited number of OEM customers, many of which are also our competitors, and a delaydelay, in an order to a future period, as well as a reduction inreduction, or loss of business of one or more of these customers has in the past and may in the future materially reduce our sales.

We had oneOne customer accounted for 15% of our revenue during the three months ended AprilJuly 3, 2026 that accounted for 19% of our revenue,2026, all of which was in our Medical segment. Our ten largest customers as a group accounted for approximately 52%53% and 55%52% of our revenue for the three months ended AprilJuly 3, 2026 and AprilJuly 4, 2025, respectively.respectively, Our ten largest customers as a group accounted forand approximately 52% and 54%53% of our revenue for the sixnine months ended AprilJuly 3, 2026 and AprilJuly 4, 2025, respectively. Because wereplacing lost business often taketakes significant time to replace lost business, in the pasttime, our operating results have been, and could in the future our operating results could be, materially and adversely affected if one or more of our major OEM customers were to cancel, or significantly delay or reduce orders.

Furthermore,We wealso generate significant accounts receivables from the salesales of our products and the provision of services directly to these customers. One customer accounted for 13%9% of our accounts receivables as of AprilJuly 3, 2026. If one or more of these customers were to cancel a significant product order or service contract, become insolvent, or otherwise be unable or fail to pay for our products and/or services inon a timely manner,basis, our operating results and financial condition could be materially and adversely affected.

Customer-driven changes in order forecasts isare a frequent occurrence that has created and continues to create challenges for us in accurately predicting the demand or delivery schedules for our products.

End-user product demand, economic uncertainties, the impact of pandemic diseases,pandemics, natural disasters, armed conflicts, geopolitical tensions, legislative, tariff, and trade policy reforms, and government investigationsinvestigations, including, for example,including those described in the risk factor titled "Our business has in the past been, is currently being, and in the future may be, negatively impacted by changes in import/export regulatory regimes, tariffs, trade wars, and national policies, including exemptions thereto", and other mattersfactors beyond our control, make it difficult for our customers to accurately forecast and plan futuretheir businessbusinesses, activities,and which makes it difficulttherefore for us to accurately predict demand orand delivery schedules for our products. Because the manufacture ofmanufacturing our products requires somelead lead-time,time, changes in customer purchasing forecasts have previously resulted in excess inventory and slowdowns inslower sales, which are likely to occur again in the future. ChangesCustomers tomay customerchange forecasts can occur on short notice,notice asdue our customers face inherentto competitive issues,pressures, new product introduction delays, and regulatory risks. Our imaging component agreements for imaging components containinclude purchasing estimates that are typically based on our customers’ forward-lookingcustomer forecasts rather than firm commitments, and actual purchasing volumes under the agreements may vary significantly from thesethose estimates. TheLonger variationX-ray from forecasted purchasing volume may be due, in part, to the increasingtube life of X-ray tubes, which can resultalso in reduced demand forreduce replacement X-ray tubesdemand in ways wethat mayare not be abledifficult to accurately forecast. Reductions in purchasing patterns have in the past, and may in the future, materially and adversely affect our operating results.

We compete in highly competitive industries and are subject to pricing pressures and other factors that have in the pastpast, and may in the futurefuture, result in margin erosion and loss of customers.

We compete in industries characterized by rapidly evolving technology, intense competitioncompetition, and pricing pressure.pressure, Weand often compete with companies that have greater financial, marketingmarketing, and other resources than us.we do. Some of the major diagnostic imaging systems companies,companies whichthat are theour primary OEM customers for our X-ray imaging components, also manufacture X-ray imaging components, including X-ray tubes and flat panel detectors, for use in their own imaging systems products.systems. We have experienced, and may again in the future experience, decreasedreduced sales of our products to these customers if they manufacture a greater percentage of their componentsincrease in-house manufacturing or purchase components from other external sources other than us,sources, which has hadin the past had, and may in the future havehave, an adverse effect on our business and results of operations. We have in the past mademade, and may in the future make, price and other concessions to maintainretain existing customers and attract new customers, and may have to make additional price and other concessions in the future.ones.

To be successful, we must anticipate our customers’ needs andneeds, demands, as well asand potential shifts in preferences. If we are unablefail to anticipatedo these needs and demands,so, or the mix of products requested by our customers changesdiffers from what we expect, our revenue,revenues, margins, and financial results could be adversely affected. When the U.S. Dollar is strong comparedrelative to the operating currencies of our international customers, ourmeeting ability to meet suchthose customers’ pricing expectations is particularly challenging and may result in erosionreduced revenues, lower product margins, loss of revenues, product margin, and/orour position in the marketmarket, or other concessions on business terms.

InCertain addition,costs certainassociated costs,with new products, including installation and warranty costs, associated with new products have been, and may in the future bebe, proportionately greater than the costs associated with existing products and have ortherefore may therefore disproportionately, materially,disproportionately and adversely affect our gross and operating margins. We may also experience lower margins due to increased commoditiescommodity prices, higher tariffs, and inadequate transfer pricing favoringthat favors sales to third parties over internal sales. If we are unable to lower these costs over time, our operating results could be materially and adversely affected. Some of the electronic components and integrated circuits used in our flat panel detectors are susceptible to discontinuance and obsolescence risks, which may force us to incorporate newer generations of these components, resulting in unplanned additional R&D expenses, delays in the launch of new products, supply disruptions, and/or inventory write-downs. Further, using aging production equipment might hamper our capacity to innovate to meet customers’ needs and demands and stay competitive. Failure to develop and adopt artificial intelligence ("AI") technology or to properly manage its uses and applications could also hinder product development, our competitiveness, and growth potential. We may also experience challenges in developing and implementing effective product and sales strategies, leading to missed opportunities and customer dissatisfaction.

This Quarterly Report contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, which provides a “safe harbor” for statements about future events, and financial performance that are based on the beliefs of, estimates made by, and information currently available to the management of Varex. These forward-looking statements include, but are not limited to, statements concerning our proposed acquisition by Teledyne Technologies Incorporated (“Teledyne”) pursuant to an Agreement and Plan of Merger, dated as of August 10, 2026 (the “Merger Agreement”), by and among Varex, Teledyne, and Detect Merger Sub, Inc., a wholly owned subsidiary of Teledyne (“Merger Sub”), pursuant to which Merger Sub will merge with and into Varex (the “Merger”), with Varex surviving the Merger as a wholly owned subsidiary of Teledyne, including our expectations regarding the timing and completion of the proposed acquisition as well as general business uncertainty relating to the proposed acquisition and the anticipated benefits of the proposed acquisition. Actual results and the outcome or timing of certain events described in these forward-looking statements are subject to risk and uncertainties and may differ significantly from those described. Important factors that could cause our actual results and financial condition to differ significantly from those projections or expectations include, among other things, the following:

•inflation and supply chain disruptions resulting in increased costs and delayeddelays in product manufacturing and delivery;

•limitations imposed by operating and financial restrictions of our debt financing; and

Varex Imaging Corporation is a leading innovator, designer and manufacturer of X-ray imaging components including X-ray tubes, flat panel and photon counting detectors and accessories, linear accelerators, image software processing solutions, and stand-alone X-ray based systems infor selectIndustrial application areas.applications. Our components are used in medical diagnostic imaging, security inspection systems, and industrial quality inspection systems, as well as for analysis and measurement applications in industrial manufacturing applications. Global OEMs incorporate our X-ray imaging components into their systems to detect, diagnose, protect, irradiate, and inspect. Varex has approximately 2,4502,500 full-time equivalent employees, located at engineering, manufacturing, and service center sites in North America, Europe, and Asia.

TheTariffs economicimposed and trade environment remains dynamic and unpredictable. Changes to tariff policies in 2025 byunder the UnitedInternational StatesEmergency andEconomic otherPowers countries,Act (“IEEPA”), particularly the bilateral United States and Chinese tariffs, impactedincreased our costs and adversely affected our results of operations and profitability in fiscal year 2025 and the first half of fiscal year 2026. In February 2026, the U.S. Supreme Court held that the International Emergency Economic Powers Act, or IEEPA,IEEPA does not authorize the President to impose tariffs. The decision invalidated certain IEEPA-based tariffs, butand didthe notU.S. resolveCourt allof questionsInternational aboutTrade subsequently ordered U.S. Customs and Border Protection ("CBP") to refund timing,IEEPA refundduties, mechanics,with orinterest, thethrough potentiala usephased ofadministrative other tariff authorities.process.

The preparation of our unaudited Condensed Consolidated Financial Statements and related disclosures in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenuesrevenues, and expenses. These estimates and assumptions are based on historical experience and on various other factors that we believe are reasonable under the circumstances. Our critical accounting policies that are affected by accounting estimates require us to use judgments, often as a result of the need to make estimates and assumptions regarding matters that are inherently uncertain, and actual results could differ materially from these estimates.

The fiscal years of the Company as reported are the 52 or 53-week periods ending on the Friday nearest September 30. Fiscal year 2026 is the 52-week period ending October 2, 2026. Fiscal year 2025 was the 53-week period that ended on October 3, 2025. The fiscal quarters ended AprilJuly 3, 2026 and AprilJuly 4, 2025 were both 13-week periods. The six-monthnine-month fiscal periods ended AprilJuly 3, 2026 and AprilJuly 4, 2025 were a 26-week39-week period and a 27-week40-week period, respectively.

Discussion of Results of Operations for the Three Months Ended AprilJuly 3, 2026 Compared to the Three Months Ended AprilJuly 4, 2025

Medical revenues increaseddecreased $2.4$8.1 million, primarily due to increaseddecreased sales of radiography, mammography, CT, mammography,Dental and other modalities of $12.0$9.5 million, partially offset by decreasedincreased sales in fluoroscopic, dental, veterinary,fluoroscopic and oncology modalitiesveterinary of $9.6$1.4 million. Overall Medical revenue for the period was impacted by a $5.3 million reduction of revenues, net, recorded in connection with the IEEPA Customer Reimbursement Liability.

Industrial revenues increased $0.7$15.6 million, primarily due to increased sales of inspection products, digital detectorsdetectors, and other products of $4.5$16.9 million, partially offset by decreased sales of inspectionX-ray products and other componentstubes of $3.8$1.3 million. Overall Industrial revenue for the period was impacted by a $1.2 million reduction of revenues, net, recorded in connection with the IEEPA Customer Reimbursement Liability.

Overall revenue during the three months ended AprilJuly 3, 2026 increased as compared to the three months ended AprilJuly 4, 2025. Americas revenue increased by $9.3$3.9 million due to increased sales of security inspection products of $4.4$5.7 million, X-ray tubesveterinary of $4.0$0.3 million, and other product sales of $0.8$0.2 million, partially offset by decreased sales of digital detectors of $1.0 million, X-ray tubes of $0.7 million, and software of $0.6 million. EMEA revenues decreased $11.8$2.7 million due to decreased sales of securityX-ray inspection productstubes of $8.5$3.7 million, digital detectors of $4.4$2.8 million, and other productsveterinary of $0.5$0.9 million, partially offset by increased sales of X-raysecurity tubesinspection products of $1.6$3.8 million, and other product sales of $0.9 million. APAC revenues increased $5.6$6.3 million primarily due to increased sales of X-raydigital tubesdetectors of $2.8$3.4 million, other product sales of $1.4 million, security inspection products of $0.9$0.8 million, digitaland detectorsX-ray tubes of $0.7 million. Revenue in the Americas, EMEA, and APAC for the period were impacted by revenue reductions of $4.8 million, $1.1 million, and other$0.6 productsmillion, ofrespectively, $1.2recorded million.in connection with the IEEPA Customer Reimbursement Liability.

The Medical segment gross profit decreasedincreased $5.3$1.6 million, primarily due to increaseddecreased material costs and the recovery of $7.4IEEPA tariffs of $8.8 million, partially offset by increasedan sales volume, favorableunfavorable shift in product sales mix,mix and increasedreduced productivity of $2.1$7.2 million. The IEEPA tariff refunds reduced Medical cost of revenue by $15.9 million and the related IEEPA Customer Reimbursement Liability reduced Medical revenues by $5.3 million, for a net favorable effect of $10.6 million.

The Industrial segment gross profit increased $1.2$7.6 million, primarily due to both increased sales volume and a favorable shift in product sales mix of $3.2$8.7 million, partially offset by increased material costs and decreased productivity of $2.0$1.1 million. The IEEPA tariff refunds reduced Industrial cost of revenue by $0.7 million and the related IEEPA Customer Reimbursement Liability reduced Industrial revenues by $1.2 million, for a net unfavorable effect of $0.5 million.

We are committed to investing in the business to support long-term growth and believe long-term research and development expenses of approximately 8% to 10% of annual revenues is the appropriate range that will allow us to innovate and bring new products to market for our global OEM customers. Research and development wereincreased 10.3%to 11.1% of revenues, in-linemainly withdue researchto andincreased developmentmaterial costs in the prior year period.costs.

Selling, general, and administrative expenses increaseddecreased $3.4$2.3 million, primarily due to increaseddecreased legal costs of $2.0$1.2 million,million otherand administrativecompensation costs of $1.5 million and marketing cost of $1.2$1.6 million, partially offset by decreasedincreased compensationmarketing and other costs and fixed commitment costs to a supplier of $1.5$0.5 million. The remaining variance was attributable to other changes in selling, general, and administrative expenses, each of which was individually insignificant.

Interest income decreasedfor the three months ended July 3, 2026 includes $0.7 million recognized on IEEPA tariff refunds, which we do not expect to recur. Excluding this amount, interest income was approximately $0.2 million, compared with $2.5 million in the prior-year quarter, a decrease of approximately 92%, primarily due to alower decline of ouraverage cash, cash equivalents, and marketable securities balances being held in interest bearing deposit accounts when comparing the secondthird quarter of fiscal year 2026 to the secondthird quarter of fiscal year 2025. This was due to an accumulation of cash in the prior period for the repayment of our convertible notes maturing in June 2025.

Interest expense for the secondthird quarter of fiscal year 2026 increaseddecreased $7.0$3.6 million compared to the secondthird quarter of fiscal year 2025 primarily due to the debt extinguishmentrefinancing costswhich occurred during the second quarter of $9.4fiscal millionyear related2026 towhich reduced the repaymentCompany's of our senior secured notes and the closing of our senior secured revolving credit facility, partially offset by reduced interest payments related to a loweroverall debt balance and provided more favorable rates in fiscal year 2026 compared to fiscal year 2025.

Taxes on Income (Loss) Income

For the three months ended AprilJuly 3, 2026, we recognized income tax expense of $1.6$0.3 million on $6.4$16.2 million of pre-tax loss.income. For the three months ended AprilJuly 4, 2025, we recognized income tax expense of $3.7$2.5 million on $10.8$86.6 million of pre-tax income.loss. Our tax expense for the three months ended AprilJuly 3, 2026 was primarily due to increased pre-tax income in profitable jurisdictions.

Discussion of Results of Operations for the SixNine Months Ended AprilJuly 3, 2026 Compared to the SixNine Months Ended AprilJuly 4, 2025

Medical revenues increaseddecreased $2.6$5.5 million, primarily due to increaseddecreased sales of radiography,dental, fluoroscopic, oncology, and veterinary of $12.6 million, partially offset by increased sales in radiographic, CT, mammography and other modalities of $15.3$7.1 million,million. partiallyOverall offsetMedical revenue for the period was impacted by decreaseda sales$5.3 million reduction of revenues, net, recorded in fluoroscopic,connection dental,with oncology,the andIEEPA veterinaryCustomer modalitiesReimbursement of $12.7 million.Liability.

Industrial revenues increased $10.3$25.9 million, primarily due to increased digital detectors, sales of security inspection products, digital detectors, and other components of $11.9$28.8 million, partially offset by decreased sales of X-ray tubes of $1.6$2.9 million. Overall Industrial revenue for the period was impacted by a $1.2 million reduction of revenues, net, recorded in connection with the IEEPA Customer Reimbursement Liability.

Overall revenue during the sixnine months ended AprilJuly 3, 2026 increased as compared to the sixnine months ended AprilJuly 4, 2025. During the sixnine months ended AprilJuly 3, 2026, Americas revenues increased $20.2$24.1 million due to increased sales of security inspection products sales of $12.9$18.6 million, increased X-ray tubes salesof $4.2 million, digital detectors of $5.0$1.3 million, and increasedother digital detectorsproduct sales of $2.3$0.8 million, partially offset by decreased sales of veterinary of $0.5 million, and software of $0.3 million. EMEA revenues decreased $7.8$10.5 million primarily due to decreased inspection product sales of $7.4 million, digital detectors salesof $7.2 million, security inspection products of $4.4$3.6 million, and veterinary of $1.1 million, partially offset by increased X-raysales tubesof other product sales of $4.0$1.0 million, and X-ray tubes of $0.4 million. APAC revenues increased $0.5$6.8 million primarily due to increased sales of other product sales.sales of $3.9 million, digital detectors of $2.0 million, X-ray tubes of $1.3 million, and security inspection products of $0.2 million, partially offset by decreased sales of software of $0.6 million. Revenue in the Americas, EMEA, and APAC for the period were impacted by revenue reductions of $4.8 million, $1.1 million, and $0.6 million, respectively, recorded in connection with the IEEPA Customer Reimbursement Liability.

IndustrialMedical segment gross profit increaseddecreased $6.0$7.2 million, primarily due to improvedincreased material costs of $5.3 million, which include the recovery of IEEPA tariffs, and both decreased sales volume and favorableunfavorable shift in product sales mix of $12.3$2.6 million, partially offset by decreasedimproved productivity andof increased$0.7 materialmillion. costsThe IEEPA tariff refunds reduced Medical cost of $6.3revenue by $15.9 million and the related IEEPA Customer Reimbursement Liability reduced Medical revenues by $5.3 million, for a net favorable effect of $10.6 million.

Research and development costs decreased to 10.3%10.6% of total revenue, primarilyin-line duewith toresearch and development costs in the final Micro-X technology transfer payment made during the first quarter of fiscalprior year 2025.period.