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Varex Imaging (VREX) Risk Analysis

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Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Varex Imaging disclosed 36 risk factors in its most recent earnings report. Varex Imaging reported the most risks in the “Legal & Regulatory” category.

Risk Overview Q2, 2026

Risk Distribution

39% Legal & Regulatory

22% Finance & Corporate

14% Ability to Sell

11% Production

8% Tech & Innovation

6% Macro & Political

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

2022

S&P500 Average

Sector Average

Risks removed

Risks added

Risks changed

Varex Imaging Risk Factors

New Risk (0)

Risk Changed (0)

Risk Removed (0)

No changes from previous report

The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q2, 2026

Main Risk Category

Legal & Regulatory

With 14 Risks

Legal & Regulatory

With 14 Risks

Number of Disclosed Risks

From last report

S&P 500 Average: 32

From last report

S&P 500 Average: 32

Recent Changes

7Risks added

1Risks removed

16Risks changed

Since Jul 2026

7Risks added

1Risks removed

16Risks changed

Since Jul 2026

Number of Risk Changed

+10

From last report

S&P 500 Average: 0

+10

From last report

S&P 500 Average: 0

See the risk highlights of Varex Imaging in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 36

Legal & Regulatory

Total Risks: 14/36 (39%)Above Sector Average

Regulation8 | 22.2%

Regulation - Risk 1

Compliance with United States laws and regulations applicable to the marketing, manufacturing, and distribution of our products may be costly, and failure or delays in obtaining regulatory clearances or approvals, or failure to comply with applicable laws and regulations could harm our business.

We, our suppliers, distributors, agents, or customers are subject to FDA, Federal Trade Commission, or other applicable United States regulatory requirements. Actual or perceived noncompliance could result in investigations, adverse publicity, fines, injunctions, civil penalties, and criminal penalties, operating restrictions, suspension or shutdown of manufacturing, loss of or delays in obtaining regulatory clearances or approvals, product seizures or recalls, reduced sales, customer order delays or cancellations, or increased insurance costs. Generally, our manufacturing operations for medical devices, and those of our third-party manufacturers, are required to comply with the FDA's QMSR, as well as other federal and state regulations for medical devices and radiation-emitting products. Failure to respond in a timely manner to a warning letter or other notice of noncompliance and to promptly come into compliance could result in the FDA bringing an enforcement action, which could include the total shutdown of our production facilities, denial of importation rights to the United States for products manufactured overseas, adverse publicity, and criminal and civil fines. Corrective actions, which may include recalls, corrections, removals, or changes to our product manufacturing and quality systems, can be expensive and may divert management resources, attention, and time. If a warning letter were issued, customers could delay purchasing decisions or cancel orders, and we could face increased pressure from our competitors, who could use the warning letter against us in competitive sales situations. Any of the foregoing could materially and adversely affect our financial results, reputation, business, and stock price. We produce some products that are classified as "Class II" devices subject to 510(k) pre-market notification clearance. A new medical device, a new indication for use, a significant change in an existing product, or the development of a new Class II device could require a new 510(k) clearance before we could market or sell those products in the United States. We cannot ensure the FDA will agree with our decisions not to seek additional approvals or clearances for particular modifications or that we would be successful in obtaining new 510(k) clearances for new products or modifications to existing products. Obtaining clearances or approvals is time consuming, expensive, and uncertain. Even if granted, such regulatory clearances or approvals may include significant limitations on the indicated uses, which may limit the potential customers for the product. Our business could suffer if required FDA clearance or approval were delayed, not granted or if uses were limited. Changes to FDA regulations, guidance, inspection procedures, user fee programs, cybersecurity expectations, software guidance or quality system requirements could increase the cost, timing and complexity of developing, manufacturing, modifying, clearing, approving or commercializing our products. In particular, FDA's transition to the QMSR and its incorporation of ISO 13485 requirements may require changes to our quality systems, documentation, supplier controls, internal procedures and inspection-readiness processes. If we are unable to implement or maintain these processes effectively, we could experience inspection findings, delays, remediation costs, restrictions on manufacturing or sales, or other enforcement or commercial consequences. We are required to submit medical device records, and in certain circumstances, correction, removal and recall reports to the FDA. Failure to timely do so could result in product liability claims, regulatory scrutiny, sanctions, enforcement actions, reduced sales and reputational harm. As we develop new products or pursue new opportunities, we may become subject to additional or evolving federal, state or foreign laws, rules, and regulations. We are also subject to laws of general applicability to environmental protection, safe working conditions, manufacturing practices, and data privacy. Compliance may be costly and may impede product development or commercialization. We generally do not maintain insurance for fines, penalties, or investigatory costs arising from regulatory violations.

Regulation - Risk 2

Changed

We sell certain X-ray tube products as replacements that are subject to medical device certification and product registration laws and regulations that vary by country and may change, and we may be unable to obtain registration approval or renew existing registrations.

We market and distribute certain X-ray tubes through distributors and third-party/multi-vendor service organizations for use as equivalent replacements for specific OEM tubes. These products are subject to medical device certification and product registration laws that vary by country and are subject to periodic review and change by local regulatory authorities. Some of these laws and regulations can operate as barriers to trade and can be difficult to navigate predictably. Certain countries also require re-registration if the product is altered in any significant way. Re-registration can be costly and time-consuming, and customers may choose competitors' products that do not require re-registration. If we are unable to obtain or renew product registrations, we may be unable to market or distribute the affected products for replacement applications in the relevant country.

Regulation - Risk 3

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.

We are a global importer of raw materials used in our finished products and an exporter of finished goods to customers worldwide. Tariffs, trade wars, import/export restrictions, boycotts, embargoes, government investigations, trade policies, 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. Tariffs on imported materials have increased our costs and prices and lowered gross margins on some of our products, and retaliatory 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 or cause customers to reduce or stop purchasing our products. For example, changes to tariff policies in 2025 by the United States and other countries, particularly bilateral United States and Chinese tariffs, impacted our results of operations and profitability in fiscal year 2025 and the first half of fiscal year 2026. Although certain IEEPA-based tariffs have been invalidated, the United States has imposed or proposed tariffs and trade measures under other authorities, including Section 122 and 301 of the Trade Act of 1974, Section 232 of the Trade Expansion Act, and Section 338 of the Tariff Act of 1930, and may continue to do so. Additional tariffs, trade restrictions, or retaliatory actions targeting specific industries, such as X-ray imaging products, medical equipment or other products we manufacture, or the components or raw materials used in manufacturing our products, could increase our costs and prices, lower gross margins, adversely impact revenue, make our products less competitive, and otherwise adversely affect our business, results of operations and financial condition. Tariff exclusions, refunds, drawback programs, foreign trade zones, bonded warehouse mechanisms and other mitigation measures may provide only partial relief, may require government approval or administrative action, may be unavailable or delayed, and may be subject to further litigation, negotiation or policy changes. Even if we are able to obtain refunds, exclusions, drawback or other mitigation benefits, we may incur additional costs to pursue them, and disputes may arise with customers, suppliers, logistics providers or other parties regarding allocation, timing or entitlement to any recovered amounts. China's stated policy of reducing its dependence on foreign manufacturers and technology companies may reduce demand for our products and our customers' products in China. China and other jurisdictions may require or incentivize the use of local suppliers, local manufacturing, local content, local partnerships, certification, product registration, local testing, technology-transfer expectations, price preferences, reimbursement preferences, procurement restrictions, or similar requirements that favor locally manufactured goods. These measures could reduce demand for our products, limit our ability to participate directly or indirectly, require us or our customers to restructure supply chains or manufacturing footprints, increase compliance costs, or make our products less competitive. In April 2025, the China Ministry of Commerce ("MOFCOM") initiated investigations related to imports of X-ray tubes and certain medical CT X-ray tubes and tube inserts for CT devices originating from the United States and India (the "MOFCOM Investigations"). We produce CT tubes and inserts in the United States and export them to China, but do not produce CT tubes and inserts in India. The MOFCOM Investigations were suspended indefinitely in November 2025, but they could be recommenced, expanded or replaced by other trade, procurement, localization, anti-dumping, countervailing duty, safeguard, export-control or industrial policy measures. Any such measures could affect our ability to export CT tubes and inserts, other X-ray imaging components or related products to China, affect customer procurement decisions in China, or require us to alter pricing, sourcing, production, product registration or distribution strategies. 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 with Iran, as well as other Middle East conflicts, may lead to new or expanded tariffs, sanctions, boycotts, embargoes, export controls, or other restrictions on the flow of goods. Such conflicts have caused, are causing, and could in the future cause disruptions in the regions and industries we serve, supply chain disruption, increased costs for goods, raw materials, transportation and logistics, reduced customer demand and delays in our ability to timely deliver products. Any of the foregoing factors could adversely affect our business, results of operations and financial condition by increasing our costs and prices, lowering gross margins, reducing demand for our products or our customers' products, making our products less competitive, limiting our ability to export or sell certain products, impairing our ability to fulfill orders on a timely basis, or requiring us to alter pricing, sourcing, production, product registration, regulatory certification, supplier qualification, distribution, supply chain or manufacturing strategies. These factors could also require us to reconsider our current operating model, including whether we can continue to operate in specifically impacted locations or need to relocate or restructure existing operations, which may require us to invest significant additional capital we had anticipated using for other purposes, such as expanding existing operations, entering new markets or paying down debt.

Regulation - Risk 4

Changed

Compliance with foreign laws and regulations applicable to the marketing, manufacturing, and distribution of our products may be costly, and failure to comply may result in unfavorable legal proceedings, significant penalties and other harm to our business.

Outside the United States, some of our products are regulated as medical devices by foreign governmental agencies similar to the FDA. To market our products internationally, we must obtain clearances or approvals for products and product modifications, which can be time consuming, expensive, uncertain, and which can delay our ability to market products. Delays in the receipt of or failure to receive regulatory approvals, the inclusion of significant limitations on the indicated uses, the loss of previously obtained approvals or failure to comply with existing or future regulatory requirements could restrict or prevent us from doing business in a country or subject us to a variety of enforcement actions and civil or criminal penalties, which would materially and adversely affect our business. In addition, compliance with changing regulatory schemes may add complexity, cost, and delays in marketing, or selling our products. Within the European Union ("EU") and the European Economic Area ("EEA"), we must obtain, and in turn affix, a CE mark certification, that indicates that a product meets the essential requirements of the EU's Medical Device Regulations ("MDR") and other applicable EU medical device requirements. By affixing the CE mark to our product, we are certifying that our product complies with the laws and regulations required by the EU/EEA countries, thereby allowing the free movement of the product within these countries and others that accept CE mark standards. If we cannot support our performance claims and demonstrate compliance with the applicable European laws, the MDR and other applicable requirements, we could lose our right to affix the CE mark to our products, which would prevent us from selling our products within the EU/EEA/Switzerland territory and in other countries that recognize the CE mark. EU medical device requirements continue to evolve, including requirements relating to EUDAMED registration, unique device identification, notified body procedures, post-market surveillance, market surveillance and conformity assessment. These changes may increase the cost and complexity of maintaining existing registrations and certifications, obtaining new or modified certifications, supporting customers' regulatory submissions, and placing products on the EU market. Delays, capacity constraints or changes in notified body processes, or our inability to satisfy new or revised data, registration or conformity assessment requirements, could delay product launches, restrict sales, require product or process changes, or increase compliance costs. We are subject to international laws and regulations of general applicability relating to matters such as environmental protection, safe working conditions, data privacy, and manufacturing practices, as well as others. These are often comparable to, or more stringent than, equivalent regulations in the United States. Sales overseas are also affected by regulation of matters such as product standards, packaging, labeling, environmental and product recycling requirements, import and export restrictions, tariffs, duties, and taxes. In addition, we are required to timely file various reports with international regulatory authorities similar to the reports we are required to timely file with United States regulatory authorities, including reports required by international adverse event reporting regulations. If these reports are not timely filed, regulators may impose sanctions, including temporarily suspending our market authorizations or CE mark, and sales of our products may suffer as a result. As we enter new businesses or pursue new opportunities internationally, or as regulatory schemes change, we may become subject to additional laws, rules, and regulations, and compliance can be costly. In China, revised medical device good manufacturing practice, registration, procurement, localization, adverse event reporting, digital record, outsourcing, contract manufacturing and quality management requirements may increase compliance costs or affect our ability, or our customers' ability, to manufacture, register, import, distribute or sell products in China. If we or our customers are unable to comply with these requirements, or if regulators interpret or apply them in a manner unfavorable to foreign manufacturers or imported components, our sales, margins, product development timelines and competitive position could be adversely affected. The failure by us or our agents to comply with these laws, rules, and regulations could delay the introduction of new products, cause reputational harm, or result in investigations, fines, injunctions, civil penalties, criminal prosecution, or an inability to sell our products in or to import our products into certain countries, which could materially and adversely affect our business.

Regulation - Risk 5

Changed

We are subject to laws governing our business practices which, if violated, could result in substantial penalties. Additionally, challenges to or investigations into our practices could increase costs, cause adverse publicity, and harm our business. Anti-corruption laws and regulations

. We are subject to the U.S. Foreign Corrupt Practices Act and anti-corruption laws, and similar laws in foreign countries, such as the U.K. Bribery Act. Any violation of these laws by us or our agents or distributors could create substantial liability for us, subject our officers and directors to personal liability, and damage our reputation. We operate in many countries, including India and China, where the public sector is perceived as being corrupt. Our strategic business plans include expanding into regions and countries that are rated as higher risk for corruption activity by Transparency International e.V., an international non-profit that publishes an annual corruption perception index, which could subject us and our officers and directors to increased scrutiny and liability from our business operations. Becoming familiar with and implementing the infrastructure necessary to comply with laws, rules, and regulations applicable to new business activities and mitigating and protecting against corruption risks could be costly. Failure by us or our agents or distributors to comply with these laws, rules, and regulations could delay our expansion into high-growth areas and materially and adversely affect our business.

Regulation - Risk 6

Added

Competition and trade compliance laws

. We are subject to various competition and trade compliance laws in the jurisdictions where we operate throughout the world. Regulatory authorities in those jurisdictions may have the power to subject us to sanctions, tariffs, and duties and may impose changes or conditions in how we conduct our business. An increasing number of jurisdictions provide private rights of action for competitors or consumers to assert claims of anti-competitive conduct and seek damages. Increased government scrutiny of our actions or enforcement or private rights of action could materially and adversely affect our business or damage our reputation. We may be required to conduct internal investigations or face audits or investigations by one or more domestic or foreign government agencies, which could be costly and time consuming and could divert our management and key personnel from our business operations. An adverse investigation or audit outcome could subject us to fines and penalties, which could materially and adversely affect our business and financial results. The currently indefinitely suspended MOFCOM Investigations are an example of the type of investigations or audits we have faced, and could in the future face. Competition laws may prohibit or increase the cost of future acquisitions.

Regulation - Risk 7

Added

Laws and ethical rules governing interactions with healthcare providers

. We may sell products to healthcare providers through distributors or engage healthcare providers to provide services. The U.S. Medicare and Medicaid anti-kickback statute, and similar state laws, prohibit payments or other remuneration intended to induce hospitals, physicians, or others to refer patients, or to purchase, lease, or order, or arrange for or recommend the purchase, lease, or order of healthcare products or services reimbursable by federal or state healthcare programs, including Medicare and Medicaid. These laws limit the financial arrangements we may have with hospitals, physicians, or other potential purchasers of our products. They particularly impact how we structure our sales offerings, including discount practices, customer support, education and training programs, physician consulting, research grants, and other fee-for-service arrangements. These laws are broadly written, and it is often difficult to determine precisely how these laws will be applied to specific circumstances. Federal and state false claims laws prohibit knowingly presenting, or causing to be presented, false or fraudulent claims for payment to Medicare, Medicaid, or other government payors, or claims for items or services that were not provided as claimed. Although we do not submit claims directly to payors, manufacturers can be, and have been, held liable if they are deemed to have caused the submission of false or fraudulent claims, including by providing inaccurate billing or coding information or by promoting products for uses not approved or cleared by the FDA (off-label promotion). Violations of anti-kickback and false claims laws can result in substantial civil and criminal penalties and exclusion from healthcare programs. Even an unsuccessful challenge or investigation could result in adverse publicity, defense costs, and harm to our business and results of operations. In addition, federal and state laws, including the Physician Payment Sunshine Act and laws in states such as Massachusetts and Vermont, require tracking and reporting of payments and ownership interest involving physicians, healthcare providers, and hospitals. Compliance can require costly systems and processes, and failure to comply can result in significant civil monetary penalties.

Regulation - Risk 8

Added

Other laws.

We are subject to other laws in foreign countries where we conduct business. For example, within the EU, the control of unlawful marketing activities is a matter of national law in each of the member states, which they closely monitor for perceived unlawful marketing activities. We could face civil, criminal, and administrative sanctions if any member state determines we have breached such state's national laws. Industry associations also closely monitor the activities of member companies. If these organizations or authorities name us as having breached our obligations under their regulations, rules, or standards, our reputation would suffer, and our business and financial condition could be materially and adversely affected.

Litigation & Legal Liabilities2 | 5.6%

Litigation & Legal Liabilities - Risk 1

Added

Litigation may arise in connection with the Merger, which could be costly, prevent or delay consummation of the Merger, divert management's attention, and otherwise adversely impact our business.

It is possible that litigation against us or our directors may be filed in the future as securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger, or other business combination agreements like the Merger Agreement. The outcome of any such litigation is uncertain, and any litigation related to the Merger could delay or prevent the consummation of the proposed Merger. Regardless of the outcome of any future litigation related to the Merger, such litigation may be time-consuming and expensive and may distract our management from running the day-to-day operations of our business. The litigation costs and diversion of management's attention and resources to address the claims and counterclaims in any litigation related to the Merger may adversely impact our business, results of operations, prospects, cash flows, and financial condition. If the Merger is not consummated for any reason, litigation could be filed in connection with the failure to consummate the Merger. Any litigation related to the Merger may result in negative publicity or an unfavorable impression of us, which could negatively affect the price of our common stock, impair our ability to recruit or retain employees, damage our relationships with our customers, resellers, distributors, and other business partners, or otherwise adversely impact our operations and financial performance. Further, one of the conditions to the completion of the Merger is that no restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction will be in effect which prevents the consummation of the Merger. As such, if any such order or injunction preventing the consummation of the Merger is obtained, that order or injunction may prevent the proposed Merger from becoming effective or from becoming effective within the expected timeframe.

Litigation & Legal Liabilities - Risk 2

Legal proceedings may materially and adversely affect our business, results of operations, or cash flows.

From time to time, we are a party to or otherwise involved in legal proceedings, claims, government inspections, audits or investigations, and other legal matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. These matters are often lengthy, uncertain, expensive, time-consuming, and disruptive to our operations. For these and other reasons, we may choose to settle legal proceedings and claims, regardless of their actual merit. If a matter is ultimately resolved against us, we may be required to pay damages or fines, some of which may exceed our insurance coverage, or to change our business practices, any of which could materially and adversely impact our business, results of operations, or cash flows. Our subsidiary Varex Imaging Deutschland AG ("Varex Germany") holds a 50% interest in VEC. Since August 2023, the VEC joint venture partners have been engaged in judicial proceedings in Germany disputing the validity of certain shareholder resolutions seeking to exclude the other party from the joint venture. If either party is successful in excluding the other, the prevailing party would be required to purchase the non-prevailing party's interest for an amount equal to 75% of the fair market value, 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 Varex Germany and Varex Imaging Corporation have filed additional lawsuits in Germany and the United States relating to intellectual property, breach of contracts, and other matters. 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 Arabia. We currently have ongoing disputes with our joint venture partner regarding the operation of the joint venture. These disputes have diverted, are diverting and could in the future divert management's time and attention, increase our costs, and otherwise adversely impact our business, results of operations, or cash flows. As discussed 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," if the MOFCOM Investigations are recommenced, the outcome could adversely impact our business, results of operations and financial condition.

Taxation & Government Incentives1 | 2.8%

Taxation & Government Incentives - Risk 1

Changed

A change in the percentage of our total earnings from international sales, changes in our international activities, or changes in tax laws could increase our effective tax rate.

Earnings from our international subsidiaries are generally taxed at rates that differ from United States rates. A change in the mix of earnings among jurisdictions, currency exchange rates, or where we perform manufacturing, research and development, or other activities could increase our effective tax rate. In addition, repatriation of foreign earnings could result in incremental foreign withholding or state taxes in the United States which could materially and adversely affect our financial results. Changes in deferred tax assets or liability valuations, tax laws or rates, or the interpretation of tax laws could materially and adversely affect our financial position and results of operations. We also have entities in certain jurisdictions with cumulative net operating losses for which no income tax benefit can be recorded due to full valuation allowance positions. Additional losses in these or other jurisdictions could further increase our effective tax rate.

Environmental / Social3 | 8.3%

Environmental / Social - Risk 1

Added

Evolving and sometimes conflicting environmental, social and governance expectations, laws and disclosure practices could expose us to risk.

We are subject to evolving laws, regulations, policies, and investor and other stakeholder expectations concerning environmental, social, and governance ("ESG") matters, including environmental sustainability and climate change, in the United States and internationally. These expectations can conflict across jurisdictions and stakeholder groups. Any ESG-related initiatives, goals, or commitments we disclose involve risks and uncertainties, may be difficult and costly to implement and may not be achieved on the timelines or in the manner we intend. In an environment of divergent views on these topics, our initiatives, goals, or commitments – or any decision to revise or discontinue them – may be criticized and the accuracy, adequacy, or completeness of our related disclosures may be challenged. Our actual or perceived failure to achieve our initiatives, goals, or commitments, or manage stakeholder expectations, could harm our reputation and our business. In addition, a number of our customers, particularly outside the United States, have adopted, or may adopt, procurement policies that require us to comply with specified social and environmental provisions. An increasing number of investors have adopted, or may adopt, ESG-related policies for portfolio companies, and various voluntary sustainability initiatives and organizations promote differing social and environmental and sustainability guidelines. These practices, policies, provisions, and frameworks are under active development, can change unpredictably and may conflict with one another. Complying with them can be difficult and expensive, and if we are unable or unwilling to do so, could adversely affect customer or investor relationships, our reputation, our business, or our financial condition.

Environmental / Social - Risk 2

Certain of our products are subject to regulations relating to use of radioactive material, compliance with which may be costly, and a failure to comply with these regulations may materially and adversely affect our business.

As a manufacturer and seller of medical and industrial devices that emit radiation or use radioactive byproduct material, we and certain of our suppliers and distributors are subject to extensive regulation by United States governmental authorities, including the FDA and the Nuclear Regulatory Commission ("NRC"), agreement state, and other state and local regulatory agencies, and comparable foreign authorities. These regulations are intended to help ensure that such devices are safe and effective and that the products that emit, produce, or control radiation comply with applicable law. These regulations govern, among other things, the design, development, testing, manufacturing, packaging, labeling, distribution, import/export, sale, marketing, and disposal of our products. Foreign requirements applicable to radiation-emitting devices and products that use radioactive materials are often comparable to, and in some cases more stringent than, those in the United States. Our devices that use radioactive material generally require NRC or agreement-state licenses and related approvals, and the manufacture and sale of those products are subject to extensive federal and state regulation that varies by jurisdiction. Manufacture, distribution, installation, service, and removal of industrial devices that use radioactive material or emit radiation also requires us to obtain and maintain licenses and certifications, and service must be performed in accordance with applicable radioactive materials licenses. Obtaining licenses and certifications may be time-consuming, expensive, and uncertain. Handling and disposal of radioactive materials from the manufacture, use, or decommissioning of our products can impose significant costs and requirements. Disposal sites that lawfully accept materials generated by the manufacture, use, or decommissioning of our products may cease to accept them or may accept them on unfavorable terms. If we or our suppliers or distributors fail to obtain, maintain, or comply with required licenses, certifications, or other radiation-related requirements, or if compliance or disposal costs increase materially, we could be subject to enforcement action, be unable to manufacture, sell, install, service, or remove affected products as planned, or incur significant additional costs, any of which could materially and adversely affect our business, results of operations, and financial condition.

Environmental / Social - Risk 3

Environmental laws impose compliance costs on our business and may also result in liability.

Environmental laws regulate many aspects of our operations, including the handling, storage, transport, and disposal of hazardous substances used in manufacturing. Compliance can be costly, and we may be assessed fines or other penalties for violations. We may also incur cleanup liabilities, including for discontinued operations. Like other manufacturers, we cannot eliminate the risk of contamination or injury from materials we use, or the risk of related claims and damage payments. Insurance has covered portions of cleanup costs from historical occurrences, but we do not expect to maintain insurance for costs or claims that might result from future contamination. For example, under a remediation plan for certain hazardous volatile organic compounds 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. The covenant requires specified remediation measures and limits use of the property and of groundwater in the underlying aquifer, including restricting the property to commercial and industrial uses and prohibiting culinary or other domestic use of that groundwater, among other limitations. Under the Separation and Distribution Agreement we entered into with Varian in connection with our spin-off, we must indemnify Varian for 20% of the cleanup liabilities related to prior corporate restructuring activities undertaken while we were a division of Varian. That obligation includes facilities sold with 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 those sold facilities allegedly shipped waste for recycling or disposal (the "CERCLA sites"). We expect to reimburse Varian for 20% of the liabilities of Varian related to these CERCLA sites, after adjusting for any insurance proceeds or tax benefits Varian receives. We assess this indemnification obligation quarterly with Varian and make accruals accordingly. Accruals have generally been small, but can fluctuate significantly from period to period. Future changes in environmental laws could also increase our costs of doing business, potentially significantly. Several countries, including some in the EU, require medical equipment manufacturers to bear certain end-of-life disposal costs. The EU has also adopted directives that may restrict hazardous or other regulated substances in some products we sell there and that can increase our operating costs and the cost of maintaining access to certain customers. These costs, and any future violations or liabilities under environmental laws or regulations, could materially adversely affect our business.

Finance & Corporate

Total Risks: 8/36 (22%)Below Sector Average

Accounting & Financial Operations3 | 8.3%

Accounting & Financial Operations - Risk 1

Changed

Customer-driven changes in order forecasts are 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, pandemics, natural disasters, armed conflicts, geopolitical tensions, legislative, tariff, and trade policy reforms, government investigations, 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 factors beyond our control, make it difficult for our customers to accurately forecast and plan their businesses, and therefore for us to accurately predict demand and delivery schedules for our products. Because manufacturing our products requires lead time, changes in customer purchasing forecasts have previously resulted in excess inventory and slower sales, which are likely to occur again in the future. Customers may change forecasts on short notice due to competitive pressures, new product introduction delays, and regulatory risks. Our imaging component agreements include purchasing estimates based on customer forecasts rather than firm commitments, and actual volumes may vary significantly from those estimates. Longer X-ray tube life can also reduce replacement demand in ways that are difficult to forecast. Reductions in purchasing patterns have in the past, and may in the future, materially and adversely affect our operating results.

Accounting & Financial Operations - Risk 2

Changed

Failure to maintain effective internal control over financial reporting and changes in accounting standards, or in management's assumptions, estimates, and judgments, could negatively impact us.

Internal control over financial reporting is complex and may need to be updated as our business or applicable accounting rules change. We cannot assure that our internal control over financial reporting will be effective in the future, or that material weaknesses will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If our internal controls and procedures are not effective, our financial statements may not accurately reflect our results of operations and financial condition, we may be unable to provide required financial statements on a timely basis and investors could lose confidence in us and the reliability of our financial statements, which could affect our stock price. Ineffective internal controls could also cause us to fail to timely file periodic reports with the SEC, which could limit our access to the capital markets and trigger defaults or other consequences under our debt agreements. In addition, GAAP and related accounting pronouncements, implementation guidance and interpretations apply to many areas of our business, including revenue recognition, impairment of intangible assets, fair value measurements, lease accounting, vendor allowances, income taxes, litigation, and other matters. These areas often require subjective assumptions, estimates and judgments by management. Changes in accounting standards or their interpretation or changes in those assumptions, estimates, or judgments can also affect our reported or expected results of operations or financial condition and our Condensed Consolidated Financial Statements. For example, as described in Note 1 to our Consolidated Financial Statements included in our Annual Report on Form 10-K under "Revision of Prior Period Financial Statements" during the three months ended July 4, 2025, we identified an error related to deferred tax assets and liabilities and income tax expense in prior periods. The error was not material to those prior periods, individually or in the aggregate, but correcting the error as an out-of-period adjustment for the quarter ended July 4, 2025 would have been material to that period, and we revised the prior-period financial statements.

Accounting & Financial Operations - Risk 3

We have incurred, and may in the future incur, impairment charges related to our goodwill, which could have an adverse effect on our financial condition and results of operations.

As of July 3, 2026, our goodwill was $197.6 million. We test goodwill and other indefinite-lived intangible assets for impairment at least annually, and more often if events or circumstances indicate that carrying amounts may not be recoverable. An impairment charge reduces earnings (or increases a loss) for the period in which the impairment is recognized. For example, during the three months ended July 4, 2025, sustained decreases in our stock price, a decline in our market capitalization, and downward revisions in our longer-term forecast during the quarter – including the impact of tariffs and the MOFCOM Investigations announcements – led us to conclude that the carrying amount of our Medical reporting unit exceeded its fair value. We recorded a $93.9 million goodwill impairment charge to our Medical reporting unit. Our goodwill impairment analysis is sensitive to changes in key assumptions used in our analysis. If those assumptions are not realized, or if other adverse developments occur, we may need to record additional impairment charges in the future. We cannot accurately predict the amount and timing of any impairment of goodwill or other intangible assets. Any such impairment could adversely affect our results of operations and financial condition. Impairment charges are generally non-cash, but they reduce our reported earnings and stockholders' equity and could affect financial ratios used by investors or under our debt agreements.

Debt & Financing2 | 5.6%

Debt & Financing - Risk 1

Changed

The Credit and Guaranty Agreement governing our Credit Facility imposes significant operating and financial restrictions that may limit our operating flexibility, and our variable-rate borrowings subjects us to interest rate risk.

As of July 3, 2026, our total indebtedness was approximately $350.7 million of principal, consisting primarily of borrowings under our Term Loan Facility and $8.7 million outstanding under our Revolving Credit Facility. Borrowings under the Credit and Guaranty Agreement bear interest at variable rates, including rates based on Term SOFR or a base rate plus an applicable margin based on our consolidated total net leverage ratio ("CNTL Ratio"). If our performance declines, our CNTL Ratio, margin, and interest expense could all increase. In addition, changes in market rates can increase the interest we pay. The Credit and Guaranty Agreement requires us to hedge at least 50% of the Term Loan Facility borrowings through the fourth anniversary of the Credit and Guaranty Agreement. In connection with closing the Credit Facility, we entered into an interest rate swap that hedges $350 million of our variable-rate interest exposure by effectively converting it to a fixed rate through March 2030. We remain subject to interest rate risk to the extent our borrowings exceed the hedged notional amount, the notional amount of the swap amortizes over time (leaving a larger unhedged portion over time), the swap matures before the Credit Facility, or the swap counterparty fails to perform. Effectiveness of the swap also depends on the creditworthiness of the counterparty and continued qualification of the swap for hedge accounting treatment. If interest rates rise and our hedging is insufficient or unavailable, interest expense could increase materially and reduce cash flow available for operations, capital expenditures, and other corporate purposes. For more information regarding our borrowings and hedging, see Note 6, Borrowings and Note 9, Financial Derivatives and Hedging Activities of the accompanying Notes to the Condensed Consolidated Financial Statements. The Credit and Guaranty Agreement imposes significant operational and financial restrictions on us including limitations on our ability to: - incur, assume, or permit to exist additional indebtedness (including guarantees thereof);- pay dividends or certain other distributions on our capital stock, repurchase our capital stock, or prepay subordinated indebtedness;- prepay, redeem, or repurchase certain debt;- issue certain preferred stock or similar equity securities;- incur liens on assets;- make certain loans, investments, or other restricted payments;- restrict the ability of our restricted subsidiaries to pay dividends or make other payments to us;- engage in transactions with affiliates;- alter the business that we conduct; and - sell certain assets or merge or consolidate with or into other companies. These restrictions may limit how we run our business, our ability to fund working capital and growth, and our ability to raise additional debt or equity on acceptable terms or at all. We may need to dedicate a substantial portion of cash flow from operations to debt service, which could leave less cash for other purposes. We may also be more vulnerable than less leveraged competitors to downturns, interest rate increases, and other adverse conditions, and less able to compete effectively or pursue new opportunities. In addition, we may face higher borrowing costs or difficulty satisfying our obligations, including our debt obligations. A breach of the covenants under the Credit and Guaranty Agreement could result in an event of default. If not cured or waived, a default may allow our lenders to accelerate the related debt, and may trigger an acceleration of any other debt that is subject to cross-default or cross-acceleration provisions. If we cannot repay the amounts due and payable under the Credit Facility, the lenders could foreclose on the collateral securing such indebtedness, which includes substantially all the assets of the Company and certain of its subsidiaries. In the event our lenders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. If our cash needs are greater than expected or our operating cash flow is weaker than expected, our cash flow may be insufficient to repay debt as it becomes due, and we may be unable to refinance on acceptable terms, or at all. Any refinancing could be at higher interest rates and could impose more restrictive covenants which could further restrict our operations. The Credit and Guaranty Agreement requires mandatory prepayments upon specified events, including from the proceeds of certain asset dispositions, which may limit our ability to use those proceeds for other corporate purposes.

Debt & Financing - Risk 2

Changed

Our liquidity and ability to operate our business could be adversely impacted by, among other factors, declines in customer spending or operating performance that impair our ability to comply with the consolidated fixed charge coverage ratio or the consolidated total net leverage ratio contained in our Credit and Guaranty Agreement.

Our historical sources of liquidity to fund ongoing cash requirements include cash flows from operations, cash and cash equivalents, and borrowings through credit facilities. The sufficiency and availability of credit may be adversely affected by a variety of factors, including, without limitation, the tightening of the credit markets, including lending by financial institutions who are sources of credit for our borrowing and liquidity; an increase in the cost of capital; reduced availability of credit; our ability to execute our strategy; the level of our cash flows, which will be impacted by customer demand for our products; compliance with the consolidated fixed charge coverage ratio and consolidated total net leverage ratio in our Credit and Guaranty Agreement; and interest rate fluctuations. We cannot predict future interest rates or the effect of rate changes on the availability or cost of borrowings and we cannot be certain that any required financing, whether debt or equity, will be available in the amounts we need or on terms acceptable to us, if at all. The Credit and Guaranty Agreement governing our Credit Facility contains a minimum consolidated fixed charge coverage ratio of 1.20 to 1.00 and a maximum CTNL Ratio. Through September 2027, the CTNL Ratio may not exceed 4.25:1.00; from December 2027 through September 2028, it may not exceed 4.00:1.00; and from December 2028 and thereafter, it may not exceed 3.75:1.00. In addition, in any fiscal quarter in which a qualifying acquisition for which total consideration is $125.0 million or more is consummated, the applicable maximum CTNL Ratio for that fiscal quarter and the next three fiscal quarters is increased by 0.50:1.00, subject to a cap of 4.50:1.00. Each ratio is tested on the last day of each fiscal quarter. Adverse developments in the economy in the past have led and in the future could lead to reduced spending by our customers and end-users which could adversely impact our net sales and cash flow and our ability to comply with one or both of these ratios. General Risks

Corporate Activity and Growth3 | 8.3%

Corporate Activity and Growth - Risk 1

We may be unable to complete future acquisitions or joint ventures or realize expected benefits from acquisitions of or investments in new businesses and joint ventures, products, or technologies, which could harm our business.

Our ability to identify and pursue attractive acquisitions or other business development opportunities, including joint ventures, is an important part of our overall business strategy. These transactions involve a number of risks, including that: - we may not be able to identify suitable candidates or successfully complete or finance identified acquisitions;- we may incur substantial costs, including advisory fees and diversion of management attention, in evaluating a potential transaction;- we may be unable to achieve the anticipated benefits from the transaction, including a return on our investment;- we may have difficulty integrating organizations, products, technologies, or employees of an acquired business and retaining the key personnel;- acquisitions, investments, and joint ventures may increase our exposure to risks, including litigation;- we may need to restructure or divest acquired businesses or assets; and - if we fail to achieve the anticipated growth from an acquisition or joint venture, or if we decide to sell assets or a business, we may be required to dispose of a business on less advantageous terms or recognize an impairment of assets or goodwill. 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, the parent company of the major supplier of 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 ("Varex Arabia"); and a minority interest in another X-ray imaging components technology company. These and other investments are subject to risk of loss of invested capital and losses associated with contributed, jointly developed, or contemporaneously developed intellectual property. These investments are inherently risky, in some cases because customer demand 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 and could experience significant and unpredictable losses or charges as a result of decisions made by joint ventures that we do not control but whose financial results proportionally affect our reported results. As discussed in the risk factor "Legal proceedings may materially and adversely affect our business, results of operations, or cash flows," 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, or unwind, dispose of or terminate our arrangements relating to these joint ventures and investments. There is no guarantee that the time and money we invest in these projects, intellectual property, products, or product enhancements will yield the expected returns on the anticipated timeline or at all.

Corporate Activity and Growth - Risk 2

Added

The announcement of our entry into the Merger Agreement and pendency of the Merger may result in disruptions to our business, and the Merger could divert management's attention, disrupt our relationships with third parties and employees, and result in negative publicity, customer concerns, or legal proceedings, any of which could negatively impact our operating results and ongoing business.

On August 10, 2026, we entered into the Merger Agreement with Teledyne, providing for the acquisition of Varex by Teledyne. Completion of the Merger, which is currently expected in early calendar year 2027, is subject to the satisfaction or waiver of certain closing conditions, including: (1) the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of our common stock, (2) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and clearance under applicable foreign merger control laws and foreign investment laws, (3) the absence of any order, judgment, injunction, or determination of a governmental entity or applicable law preventing or prohibiting the consummation of the Merger, (4) the accuracy of each party's representations and warranties, subject to certain standards set forth in the Merger Agreement, (5) the performance and compliance in all material respects of each party's agreements and covenants under the Merger Agreement, and (6) in the case of the obligations of Teledyne and Merger Sub to effect the Merger, no Company Material Adverse Effect (as defined in the Merger Agreement) with respect to Varex having occurred since the date of the Merger Agreement. There is no assurance that all of the conditions will be satisfied or waived, or that the Merger will be completed on the proposed terms, within the expected timeframe, or at all. Furthermore, there are additional inherent risks in the Merger, including, but not limited to, the risks detailed below. During the period prior to the closing of the Merger, our business is exposed to certain inherent risks due to the effect of the announcement or pendency of the Merger on our business relationships, financial condition, operating results, and business, including: - potential uncertainty in the marketplace, which could result in current and prospective customers and distributors to purchase products and services from our competitors or reduce, delay or cancel purchasing from us;- the possibility of disruption to our business and operations, including diversion of management attention and resources;- the inability to attract and retain key personnel (including as a result of solicitation by our competitors or others), and the possibility that our current employees could be distracted, and their productivity decline as a result, due to uncertainty regarding the Merger;- the inability to pursue alternative business opportunities or make changes to our business and other restrictions on our ability to conduct our business, pending the completion of the Merger;- our inability to solicit other acquisition proposals during the pendency of the Merger;- the amount of the costs, fees, expenses, and charges related to the Merger Agreement and the Merger; and - other developments beyond our control, including, but not limited to, changes in domestic or global economic or political conditions that may affect the timing or success of the Merger. The Merger may be delayed, and may ultimately not be completed, due to a number of factors, including: - the failure to obtain the approval of the adoption of the Merger Agreement by our stockholders;- the failure to obtain regulatory approvals from certain governmental entities (or the imposition of any conditions, limitations or restrictions on such approvals);- potential future stockholder litigation and other legal and regulatory proceedings, which could delay or prevent the Merger; and - the failure to satisfy the other conditions to the completion of the Merger, including the possibility that a Company Material Adverse Effect on our business would permit Teledyne not to close the Merger. If the Merger does not close, our business and stockholders would be exposed to additional risks, including: - to the extent that the current market price of our common stock reflects an assumption that the Merger will be completed, the price of our common stock could decrease if the Merger is not completed;- investor confidence could decline, stockholder litigation could be brought against us, relationships with existing and prospective customers, distributors, manufacturers, service providers, investors, lenders, and other business partners may be adversely impacted, we may be unable to hire or retain key personnel, and profitability may be adversely impacted due to costs incurred in connection with the pending Merger; and - the requirement that we pay a customary termination fee of $25.3 million if the Merger Agreement is terminated in certain circumstances, including by us in order to accept a superior proposal or by Teledyne because our Board of Directors withdraws its recommendation in favor of the Merger. Even if successfully completed, there are certain additional risks to our stockholders from the Merger, including: - the amount of cash to be paid under the Merger Agreement is fixed and will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition, or operating results or in the event of any change in the market price of, analyst estimates of, or projections relating to, our common stock;- the fact that receipt of the all-cash per share merger consideration under the Merger Agreement is taxable to stockholders that are treated as U.S. holders for U.S. federal income tax purposes; and - the fact that, if the Merger is completed, our stockholders will forego the opportunity to realize the potential long-term value of the successful execution of our current strategy as an independent company, and will be affected by the ability of Teledyne to integrate and implement its plans, forecasts and other expectations with respect to our business and realize additional opportunities for growth and innovation. Any of the foregoing, individually or in combination, could materially and adversely affect our business, our financial condition, and our results of operations and prospects.

Corporate Activity and Growth - Risk 3

Added

Completion of the Merger is subject to the conditions contained in the Merger Agreement, including receipt of regulatory approvals, which may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that cannot be met, and if these conditions are not satisfied or waived, the Merger will not be completed.

Before the Merger may be completed, various consents, clearances, approvals, authorizations and declarations of non-objection, or expiration of waiting periods (or extensions thereof), must be obtained from certain regulatory and governmental authorities in the U.S., in China, and in numerous other jurisdictions. In addition, the Merger may be reviewed under antitrust statutes or foreign direct investment regimes of other governmental authorities. In deciding whether to grant the required regulatory approval, consent or clearance, the relevant governmental entities will consider the effects of the Merger on competition within their relevant jurisdiction. Regulatory and governmental entities may impose conditions on their respective approvals, in which case lengthy negotiations may ensue among such regulatory or governmental entities, Teledyne and us. Such conditions, any such negotiations and the process of obtaining regulatory approvals could have the effect of delaying or preventing consummation of the Merger. Subject to the terms of the Merger Agreement, we have agreed to use our reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper, or advisable under applicable laws to consummate and make effective the transactions contemplated by the Merger Agreement, including the Merger. Satisfaction of many of the closing conditions is not within our control. For example, we cannot be certain that required regulatory clearances and approvals will be obtained in a timely manner or at all, or that the granting of these regulatory clearances and approvals will not involve the imposition of regulatory remedies on the completion of the Merger. If any of the closing conditions are not satisfied or waived prior to May 10, 2027, which deadline may be extended to August 27, 2027, under certain circumstances, it is possible that the Merger Agreement will be terminated.

Ability to Sell

Total Risks: 5/36 (14%)Above Sector Average

Competition1 | 2.8%

Competition - Risk 1

Changed

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

We compete in industries characterized by rapidly evolving technology, intense competition, and pricing pressure, and often compete with companies that have greater financial, marketing, and other resources than we do. Some of the major diagnostic imaging systems companies that are our primary OEM customers also manufacture X-ray imaging components, including X-ray tubes and flat panel detectors, for use in their own systems. We have experienced, and may again in the future experience, reduced sales to these customers if they increase in-house manufacturing or purchase components from other external sources, which has in the past had, and may in the future have, an adverse effect on our business and results of operations. We have in the past made, and may in the future make, price and other concessions to retain existing customers and attract new ones. We also compete with independent X-ray tube manufacturers for OEM and independent servicing business, with numerous smaller competitors in flat panel detectors, and with other OEM suppliers in our Industrial business, primarily outside of the United States. Some foreign competitors may receive government support or local-manufacturer preferences that we do not, and they may not be subject to the same tariffs, trade policies, trade compliance regulations, government investigations, product safety, quality system, environmental, restricted-substance, cybersecurity, data, labeling, registration, or other regulatory or legal requirements as we are. Any inability to develop, validate, qualify, obtain, or support required regulatory clearances, approvals, certifications, registrations, or customer acceptances for, and supply commercial quantities of competitive products as quickly and effectively as our competitors could limit product acceptance and adversely affect our pricing, sales, revenues, position in the market, gross margins, and operating margins.

Demand3 | 8.3%

Demand - Risk 1

Changed

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

One customer accounted for 15% of our revenue during the three months ended July 3, 2026, all of which was in our Medical segment. Our ten largest customers as a group accounted for approximately 53% and 52% of our revenue for the three months ended July 3, 2026 and July 4, 2025, respectively, and approximately 52% and 53% of our revenue for the nine months ended July 3, 2026 and July 4, 2025, respectively. Because replacing lost business often takes significant time, our operating results have been, and could in the future be, materially and adversely affected if one or more of our major OEM customers cancel, or significantly delay or reduce orders. We also generate significant accounts receivables from the sales of products and services to these customers. One customer accounted for 9% of our accounts receivables as of July 3, 2026. If one or more of these customers cancel a significant product order or service contract, become insolvent, or fail to pay on a timely basis, our operating results and financial condition could be materially and adversely affected.

Demand - Risk 2

Changed

Demand for our security, industrial, and inspection products tends to be unpredictable, which can lead to volatility in our revenues and earnings.

Demand for our security and inspection products is heavily influenced by United States and foreign government policies on national and homeland security, border protection, and customs activities. Those policies depend on levels of government employment, government debt, and government budgets and appropriations, which are subject to economic conditions, political changes, and oil prices. Even when budgets and appropriations, economic and political conditions, and oil prices are favorable it is difficult to predict when governments will issue requests for bids, complete their bidding process, and award tenders, which can result in volatility in our revenues and earnings.

Demand - Risk 3

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 from customers located outside the United States accounted for approximately 71% and 69% of our total revenues for the three months ended July 3, 2026 and July 4, 2025, respectively, and approximately 69% and 69% of our total revenues for the nine months ended July 3, 2026 and July 4, 2025, respectively. We intend to continue expanding internationally and expect to expend significant resources in doing so. Our results have been, are currently being, and could in the future be affected by a variety of factors, including: - events and actions described in the risk factors "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 "Customer-driven changes in order forecasts are a frequent occurrence that has created and continues to create challenges for us in accurately predicting the demand or delivery schedules for our products";- currency fluctuations, particularly the relative strength of the U.S. Dollar, which is our functional and reporting currency;- difficulties in staffing and managing employee relations in foreign operations, including in foreign joint ventures, particularly in attracting and retaining personnel qualified to design, test, sell, and support our products;- difficulties in coordinating global operations and maintaining uniform standards, controls, procedures, and policies;- longer payment cycles associated with many customers located outside the United States;- difficulties in interpreting or enforcing agreements and collecting receivables through many foreign legal systems; and - burdensome and/or changing governmental regulations, including data privacy laws and regulations. Some of our locations expose us to elevated security risks. Certain services are performed in or near high-risk locations that experience political, social, or economic turmoil, war or civil unrest, or high levels of criminal or terrorist activities. In those locations, we may incur substantial costs to protect our personnel and we may suffer the loss of employees and contractors, which could harm our business, reputation, and operating results.

Sales & Marketing1 | 2.8%

Sales & Marketing - Risk 1

Our success depends on meeting our customers' needs and demands.

To be successful, we must anticipate our customers' needs, demands, and potential shifts in preferences. If we fail to do so, or the mix of products requested by our customers differs from what we expect, our revenues, margins, and financial results could be adversely affected. When the U.S. Dollar is strong relative to the operating currencies of our international customers, meeting those customers' pricing expectations is particularly challenging and may result in reduced revenues, lower product margins, loss of our position in the market, or other concessions on business terms. Certain costs associated with new products, including installation and warranty costs, have been, and may in the future be, proportionately greater than the costs associated with existing products and therefore may disproportionately and adversely affect our gross and operating margins. We may also experience lower margins due to increased commodity prices, higher tariffs, and transfer pricing that 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, as well as counterfeit-part and unauthorized substitution risks, which may force us to incorporate newer generations of these components and result in unplanned additional R&D expenses, delayed product launches, supply disruptions, or inventory write-downs. Aging production equipment may also limit our ability to innovate, meet customer needs, and remain competitive. Failure to develop, validate, adopt, govern, or properly manage artificial intelligence ("AI") technology, its use and applications, including AI used in products, engineering, manufacturing, quality, regulatory, service or commercial processes, could hinder product development, competitiveness, and growth. Challenges in developing and implementing effective product and sales strategies could also result in missed opportunities and customer dissatisfaction.

Production

Total Risks: 4/36 (11%)Below Sector Average

Manufacturing2 | 5.6%

Manufacturing - Risk 1

Product defects or misuse may result in material product or other liability or professional errors and omissions claims, litigation, investigation by regulatory authorities, or product recalls.

Our business exposes us to product and other liability claims inherent in the manufacture, sale, installation, servicing, and support of components used in medical devices and other devices that deliver radiation. Because our products are involved in the intentional delivery of radiation to the human body and other situations where people may come into contact with radiation, significant personal injury or loss of life is possible. In addition, if our X-ray inspection systems fail to detect bombs, explosives, weapons, contraband, or other threats to personal safety, the result could include personal injury, loss of life, and extensive property damage. We may also face warranty and damage claims for property damage, personal injury, or economic loss arising from 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 reputational harm, whether or not our products or services were a factor. From time to time, we may be a party to product liability litigation that, if adversely determined, could materially and adversely affect our financial results. If a product we design or manufacture is 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 actual merit. An adverse determination in a product liability action could result in adverse publicity or significant damages, including punitive damages, and could materially and adversely affect our financial position, results of operations, or cash flows. We maintain limited product liability insurance coverage. Our policies are expensive and have high deductibles and self-insured retentions. Coverage may prove to be inadequate, and future policies may not be available on acceptable terms or in sufficient amounts, if at all. If a material claim is uninsured or exceeds our coverage, we may be required to pay substantial damages, which could materially and adversely affect our financial position and results of operations.

Manufacturing - Risk 2

Changed

If we are unable to match our manufacturing capacity with demand for our products, our financial results may suffer.

Many of our products have a long production cycle, and we must anticipate demand to maintain adequate manufacturing and testing capacity. If we fail to anticipate demand, or if our manufacturing or testing capacity does not keep pace with product demand, we may be unable to fulfill orders on a timely basis, which could adversely affect our financial results and overall business. Conversely, if demand for our products decreases, the fixed costs associated with excess manufacturing capacity may harm our financial results, including by reducing gross margins and increasing research and development costs as a percentage of revenue.

Employment / Personnel1 | 2.8%

Employment / Personnel - Risk 1

Changed

If we are unable to attract, retain, integrate, and train our management team and other key personnel, we may not be able to maintain or expand our business.

Our success depends on our ability to attract, retain, integrate, and train our management team and other key personnel, including qualified engineering, service, sales, marketing, manufacturing, and other staff. We compete for these employees with other medical equipment and software manufacturers, industrial equipment and systems manufacturers and technology companies, as well as universities and research institutions. We have experienced a competitive labor market in recent years, and compensation-related costs have increased and may continue to increase. Our United States-based employees, including our senior management team, work for us on an at-will basis, and we cannot assure that any of them will remain with us. Replacing key employees can take a significant amount of time. To the extent we hire employees from competitors, we may also face allegations that they were improperly solicited or that they disclosed proprietary or other confidential information. Workforce reductions, hiring freezes, or underinvestment in training and career development could also make it harder to execute our strategy, maintain institutional knowledge, and develop the skilled personnel and leadership we need. If we cannot attract, retain, and train qualified personnel, we may be unable to maintain or expand our business.

Supply Chain1 | 2.8%

Supply Chain - Risk 1

Changed

Inflation and supply chain disruptions, including the loss of a key supplier, inability to obtain raw materials or important components, trade restrictions, and other constraints, have impacted our ability to manufacture and deliver products, and have increased our costs, and may continue to do so.

Inflation and supply chain disruptions have affected, and could in the future affect, our ability to manufacture certain products. Sustained inflation has resulted in, and may continue to result in, higher interest rates and capital costs, increased shipping costs, supply shortages, higher labor costs, weaker exchange rates, higher pricing that reduces demand for our products, and other similar effects. Recent geopolitical conflicts, including conflicts in the Middle East, and related disruption or perceived disruption to energy markets, shipping routes, air cargo capacity, insurance markets, freight networks and logistics providers, have increased and may continue to increase transportation, fuel, input and other costs. Material shortages and delays due to inflation, trade restrictions, geopolitical tensions, armed conflicts, and other constraints have caused, and could in the future cause, us to temporarily stop production of certain products or miss opportunities for additional sales. We require certain raw materials for X-ray tubes and industrial products, including copper, nickel, silver, gold, lead, tungsten, iridium, rhenium, molybdenum, rhodium, niobium, zirconium, beryllium, gadolinium, and various high grades of steel alloy. Worldwide demand, availability, and pricing of these raw materials are volatile and may be affected by export controls, sanctions, resource nationalism, military demand, energy costs, geopolitical conflicts, trade restrictions, supplier concentration, or changes in Chinese or other government policies. Availability may also be affected if suppliers limit their exposure to certain markets in response to unfavorable trade policies or otherwise. If we are unable to obtain materials needed for certain products without unreasonable cost or delay, customers may seek alternative suppliers or in-source certain products. Higher material costs could also reduce our margins or sales, make it uneconomical to produce certain products, or otherwise materially and adversely affect our business and financial results. Competitors with greater financial resources may be better able to restructure their manufacturing and supply chains in response to geopolitical and economic trends, giving them a competitive advantage. We obtain some product components, such as transistor arrays, cesium iodide coatings, and specialized integrated circuits for flat panel detectors, as well as X-ray tube targets and windows, housings, glass frames, high-voltage cable, bearings, and various other components, from a limited group of suppliers or sole-source suppliers. If suppliers cease producing these or other components, prioritize other customers, fail to meet our delivery timelines, are located 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. In that event, we may need to obtain and qualify one or more replacement suppliers or manufacture the components internally. Doing so could require us to redesign or modify our products to incorporate new parts or require us to obtain clearance, qualification, or certification, or other regulatory approvals, including from the FDA or foreign regulators; significantly increase costs for the affected products; delay delivery of affected and related products; or prevent us from meeting delivery obligations to customers. Any of the foregoing could materially and adversely affect our business and financial results.

Tech & Innovation

Total Risks: 3/36 (8%)Below Sector Average

Innovation / R&D1 | 2.8%

Innovation / R&D - Risk 1

Our success depends on the successful development, introduction, and commercialization of new generations of products and enhancements to, or simplifications of, existing product lines.

We operate in business segments characterized by rapid change and technological innovation. Our customers use our products in medical diagnostic, security, and industrial imaging systems, and we must continually introduce new products at competitive prices while improving existing products with higher quality, lower costs, and additional features. We and our joint ventures have spent, and may in the future need to spend, more time and money than expected to develop, market, and introduce new products, enhancements, or technologies. Even if we introduce new products, enhancements, or technologies on the expected timeline, customers may not accept or purchase them, and we may be unable to recover all or a meaningful portion of our investment. Once introduced, new products may materially and adversely reduce sales of existing products or make them less desirable or obsolete, which could materially and adversely impact our revenues and operating results. We may be unable to successfully develop, manufacture, or introduce new products or enhancements to existing products. Product roll-outs and changes to existing products require compliance with complex quality assurance, design control, risk management, verification and validation, production and process control, supplier control, compliant handling, post-market surveillance, and change-control requirements, which may include the Quality Management System Regulation ("QMSR") of the U.S. Food and Drug Administration ("FDA") ISO 13485, the EU Medical Device Regulation and In Vitro Diagnostic Medical Device Regulation, Medical Device Single Audit Program ("MDSAP") requirements, notified body certification requirements, and other country-specific product registration, listing, licensing, labeling, and vigilance obligations. Failure to complete these processes on a timely and efficient basis could delay product launches, impair our ability to attract or retain customers, or cause customers to delay or cancel orders, any of which would materially and adversely affect our revenues and operating results.

Trade Secrets1 | 2.8%

Trade Secrets - Risk 1

Changed

Our competitive position would be harmed if we are unable to maintain or defend our intellectual property rights, and protecting our intellectual property and defending against infringement claims can be costly.

We file patent applications covering new products and manufacturing processes as appropriate. We cannot assure that patents will issue from any pending or future applications, or that our current patents, the claims allowed under them, or patents for technologies licensed to us will be sufficiently broad to protect our technology position against competitors. We also jointly develop intellectual property with third parties and seek to protect our rights through licenses and other contractual arrangements. We rely on a combination of copyright, trade secret, and other laws, and contractual restrictions on disclosure, copying, and transferring title, including confidentiality agreements with vendors, strategic partners, co-developers, employees, consultants, and other third parties, to protect our proprietary and other confidential rights. Our trade secrets may become known or be independently developed by others, including through misappropriation or unauthorized access to our technology systems, which could materially and adversely affect our business and financial results. We maintain and enforce registered and unregistered trademarks to support customer recognition of our products, but unauthorized parties may still use them. We also license certain patented or proprietary technologies from others. In some cases, products generating substantial revenues may depend on these license rights. If we lose rights to license these technologies, or if our licensing costs materially increase, our business could suffer. There is substantial litigation over patent and other intellectual property rights in the industries in which we compete. Competitors and non-practicing entities continually review other companies' activities for possible conflicts with their intellectual property rights. From time to time, we have received notices from parties asserting infringement and have been subject to lawsuits alleging infringement of patent or other intellectual property rights. We have also entered, and in the future we may enter, into agreements requiring us to indemnify customers for intellectual property infringement, which could subject us to liability. Intellectual property disputes have occurred, are occurring, and may occur in the future, including disputes involving alleged breaches of licenses or other contractual arrangements. Any such dispute could be costly and time-consuming and could divert management and key personnel from our operations. We may not prevail in a dispute. We do not maintain insurance for intellectual property infringement, so defense costs, whether or not we successfully defend a claim, will be borne by us and could be significant. If we are unsuccessful in defending or appealing an infringement claim or a claim alleging other contractual breaches, we may be subject to significant damages, and our financial position, results of operations, or cash flows could be materially and adversely affected. We may also be subject to injunctions against the development and sale of our products, which could materially reduce our revenues. In addition, as we expand our manufacturing outside of the United States, more of our intellectual property may be held in jurisdictions that lack robust intellectual property protections, which may make it harder for us to adequately protect our rights.

Cyber Security1 | 2.8%

Cyber Security - Risk 1

Disruption of critical information systems or material breaches in the security of our systems may materially and adversely affect our business and customer relations.

Information technology, including technology from third-party providers, helps us operate efficiently, interface with and support our customers, maintain financial accuracy and efficiency, and produce our financial statements. In the ordinary course of business, we collect, process, and store sensitive data in our data centers and on our networks, as well as in third-party off-site data centers, including intellectual property, proprietary business information, customer, supplier, business partner, and website-user information, patient data, and personally identifiable information of customers and employees. We have been, and expect to continue to be, subject to cyberattacks, and may be subject to ransomware and distributed denial-of-service attacks, spear-phishing attacks, and other attempted intrusions on our networks and systems by a wide range of actors. We expect our third-party vendors to face similar attacks and intrusion attempts. Despite security measures, the threat of information security breaches and attacks is increasing, including from computer viruses and other malicious code, unauthorized access attempts, employee misuse, including misuse or failure to effectively manage the use of AI and machine learning technologies, human error, and cyber-attacks. The techniques used to obtain unauthorized access or to sabotage systems change frequently, are increasingly sophisticated, and often are not recognized until launched against a target. As a result, we may be unable to anticipate or promptly detect these techniques, or the vulnerabilities they have caused or other potential vulnerabilities or security defects, or to implement adequate preventative measures. A security breach could result in disclosure, misuse, or loss of confidential information, trade secrets, personal information, proprietary data, or other competitively sensitive information; data leaks; material disruption of our operations; litigation; and liability to employees, customers, shareholders, and/or regulatory authorities. If our data management or other systems do not effectively collect, secure, store, process, or report data needed to operate our business, whether due to equipment malfunction or constraints, service interruptions, software deficiencies, misuse, or human error, our ability to effectively plan, forecast, and execute our business plan and comply with applicable laws and regulations could be impaired, perhaps materially. We also use certain cloud-based software. A security breach, whether of our products, of our customers' network security and systems, or of third-party hosting services could disrupt access to our customers' stored information and could lead to the loss of, damage to, or public disclosure of our customers' stored information, including patient health information. Disruptions of our critical information systems or material impairment or breaches of our systems could have serious negative consequences, including possible patient injury, inability to timely report our operating results, regulatory action, fines, penalties and damages, reduced demand for our solutions, customers' reluctance to use our solutions, harm to our reputation and brand, and time-consuming and expensive litigation, any of which could have a material and adverse effect on our financial results.

Macro & Political

Total Risks: 2/36 (6%)Above Sector Average

Economy & Political Environment1 | 2.8%

Economy & Political Environment - Risk 1

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

Sales of our products to OEMs in the medical sector depend indirectly on whether adequate third-party reimbursement is available for our customers' products and related procedures. Reimbursement may come from government programs, including United States Medicare and Medicaid and foreign government programs, private insurers, health maintenance organizations, preferred provider organizations and similar payors. If reimbursement is inadequate or unavailable, demand for our customers' products – and, in turn for our products – may decline, which could harm our business, results of operations, financial condition, and prospects. We do not bill third-party payors and have limited ability to influence coverage, coding, or payment decisions for our customers' products. Healthcare initiatives and medical cost-containment measures in the United States and many foreign countries could limit the use of our products and our customers' products, reduce reimbursement available for such use or for related procedures, impose additional taxes on the sale or use of medical products, or increase the administrative and financial burden of compliance. Any change that lowers reimbursement for our or our customers' products or for procedures that use them, including changes to existing reimbursement incentives that have supported conversion from analog to digital X-ray systems, reduces procedure volumes, or increases cost-containment pressures on us or others in the healthcare sector could lead our OEM customers to seek lower prices for our products or to delay or reduce purchases, and could materially and adversely affect our business and results of operations.

Natural and Human Disruptions1 | 2.8%

Natural and Human Disruptions - Risk 1

Changed

Our operations are vulnerable to interruption or loss due to natural or other disasters, climate-related events, power loss, strikes, and other events beyond our control.

We conduct some of our activities, including manufacturing, research and development, administration, and data processing at facilities located in areas that have experienced or may in the future experience natural disasters. Natural disasters (such as a major fire, hurricane, earthquake, flood, tsunami, or volcanic eruption), severe weather conditions, adverse climate-related events, war or terrorism, and disruptions in utilities and other services affecting our facilities or those of our suppliers could significantly disrupt our operations and delay or prevent product manufacture and shipment while the damaged facilities are repaired, rebuilt, or replaced. These delays could be lengthy and costly. If any of our customers' facilities are adversely affected by such a disaster or event, shipments of our products could be delayed, and customers may delay purchases until our or their operations return to normal. Even if suppliers or customers respond quickly, the effects could create uncertainty in our business operations. Concerns about terrorism, the effects of a terrorist attack, political turmoil, or outbreaks of epidemic diseases have in the past had, and could again in the future have, a negative effect on our operations, those of our suppliers and customers, and the ability to travel, which could adversely affect our revenues and financial performance.

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?

Risk factors are any situations or occurrences that could make investing in a company risky.

The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.

They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.

It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.

How do companies disclose their risk factors?

Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.

Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.

Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.

According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.

How can I use TipRanks risk factors in my stock research?

Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.

You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.

Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.

A simplified analysis of risk factors is unique to TipRanks.

What are all the risk factor categories?

TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.

1. Financial & Corporate

Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.

2. Legal & Regulatory

Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
Regulation – risks related to compliance, GDPR, and new legislation.
Environmental / Social – risks related to environmental regulation and to data privacy.
Taxation & Government Incentives – risks related to taxation and changes in government incentives.

3. Production

Costs – risks related to costs of production including commodity prices, future contracts, inventory.
Supply Chain – risks related to the company’s suppliers.
Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.

4. Technology & Innovation

Innovation / R&D – risks related to innovation and new product development.
Technology – risks related to the company’s reliance on technology.
Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.

5. Ability to Sell

Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
Competition – risks related to the company’s competition including substitutes.
Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
Brand & Reputation – risks related to the company’s brand and reputation.

6. Macro & Political

Economy & Political Environment – risks related to changes in economic and political conditions.
Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
International Operations – risks related to the global nature of the company.
Capital Markets – risks related to exchange rates and trade, cryptocurrency.