$3.22 Billion
Prior Fiscal: $2.91 Billion
Percentage Change: +10.6%
No. of Employees: 10,062

The signs started off subtle—barely noticeable, really, to common folk like Frank Rosenthal: a scratchy throat, minor mouth sores, some ear discomfort.

Minor aches and pains, Rosenthal thought to himself. Nothing to be concerned about.

Rosenthal wasn’t concerned. Not at first, anyway.

But his concerns grew as those aches and pains lingered, and they quickly intensified with the onset of new symptoms (“fullness” in his throat, difficulty swallowing).

Rosenthal finally consulted a doctor after noticing a change in his singing voice.

Turns out, the “aches and pains” that Rosenthal initially considered minor annoyances weren’t at all minor but rather the early warning signals of cancer. Base of tongue cancer, specifically.

Rosenthal’s prognosis was good, but treating the cancer could potentially cost the avid musician his singing voice. Traditional radiation therapy would almost certainly leave Rosenthal without the ability to swallow, taste, or sing, as the high-energy waves used to destroy the cancer cells often cause the muscles and mucosal lining in the mouth, throat, and esophagus to stiffen and become deformed.

Rosenthal couldn’t imagine living his life without song. But through research, he discovered a way to possibly save his voice: Proton therapy, an extremely precise form of cancer treatment that results in up to 60 percent less radiation and dramatically minimizes serious side effects (i.e., inability to swallow or sing).

Traditional radiation delivers X-rays, or beams of photons, to the tumor and beyond it, which can damage nearby tissues; conversely, proton therapy delivers a beam of proton particles directly to the tumor and therefore is less likely to damage nearby tissue.

Rosenthal was treated for his cancer on Varian Medical System’s ProBeam Proton Therapy System. He was cured of the disease and regained his taste buds in less than three months—a feat unheard of among radiation therapy-treated head and neck cancer patients.

Post-recovery, Rosenthal and his wife went on a Mediterranean cruise, where he savored and enjoyed the regional cuisine. “My successful recovery was due to many factors,” he said. “You have to have a positive attitude and I think having a positive attitude and a fantastic support system played [a role] in my recovery.”

ANALYST INSIGHTS: Varian is growing across market segments horizontally (Radiation Oncology and Interventional Radiology) and also making inroads geographically. Varian is poised for record growth in the coming 12 months as there will be pent-up post-COVID demand for cancer related procedures.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

The proton therapy system that cured Rosenthal’s cancer received a boost of support itself, as Varian introduced an improved version of its ProBeam Proton Therapy System in October 2018. The new system, ProBeam 360°, has a 30 percent smaller footprint than its predecessor and features 360-degree rotating gantry, a powerful particle accelerator, iterative cone-beam computed tomography (CBCT) imaging and high-definition pencil-beam scanning technology. The system also gives clinicians a viable path to potential next-generation treatments such as Flash therapy.

The 360-degree rotating gantry of ProBeam 360° enables efficient intensity modulated proton therapy (IMPT), and faster treatment times by minimizing patient repositioning and re-imaging, and allowing high-quality CBCT imaging from almost any angle. RapidScan technology, available on the ProBeam 360°, simplifies the process of motion management by delivering each field in a single breath-hold. This capability increases the number of patients who can comply with breath-hold treatments like lung SBRT.

“Proton therapy plays an important role in the fight against cancer,” Kolleen Kennedy, chief growth officer and president of Varian’s Proton Therapy Solutions, said in unveiling the new system. “We designed ProBeam 360° to efficiently deliver sophisticated treatment techniques today, and also provide customers with a pathway to potential future treatment advancements such as Flash therapy.”

There was less foot traffic than anticipated on that pathway in FY19 (ended Sept. 27, 2019), as Varian’s Proton Solutions revenue fell 12 percent to $122.3 million. The company attributed the decrease to declining product revenues from the timing of various project completions and stages of system installations. The dropoff, however, was partially abated by an increase in service revenues.

The Proton Solutions sales deficit, however, had a negligible impact on the company’s total sales, which rose 10.6 percent to $3.22 billion; that increase was driven largely by Varian’s Oncology Systems division, where revenue jumped 10.5 percent to $3.06 billion on higher volumes of hardware shipments and improved software sales. However, Oncology Systems sales was partially offset by a $4 million negative impact, net of the expected refund for tariff exclusions, from the U.S.-China tariff tiff.

Higher demand for hardware products and services and increased revenue from North American software licenses bolstered Americas Oncology Systems sales. Both APAC (Asia Pacific) and EMEA (Europe, Middle East, Africa) Oncology Systems benefited from the same growth factors, but the latter region’s increase was partially neutralized by unfavorable foreign currency exchange rates. Fiscal 2019’s service revenues also included roughly $15.5 million from Cancer Treatment Services International (CTSI), a company Varian acquired last may for $283 million.

Founded in 2006 by business executives and University of Pittsburgh Medical Center doctors, CTSI operates cancer care brand the American Oncology Institute in various South Asia locations, with a flagship hospital in Hyderabad, India. CTSI’s Oncology Solutions division is based in Pennsylvania and acts as a centralized management hub for the firm’s cancer centers. CTSI also houses a reference laboratory brand that provides University of Pittsburgh Medical Center-guided pathology services in India.

Revenues from the Other category was $19.4 million for fiscal year 2019 and relate to acquisitions completed during FY19.

“Our organic innovation is complemented by our disciplined acquisition strategy to expand into other addressable markets, providing the opportunity to touch more patients and accelerate growth,” Wilson said in the annual report. “Since the beginning of fiscal 2018, we have completed 10 acquisitions, including six in fiscal 2019.”

Varian’s spending spree began in October 2018 with the purchase of cloud-based oncology-focused software developer Noona Healthcare and ramped up last spring with the acquisitions of CTSI and CyberHeart. The latter company has developed technology to use radiation therapy in the heart (cardiac radio-ablation), and other forms of cardiovascular radiosurgery. Varian’s purchase of CyberHeart could give the company a market advantage via potentially revolutionary electrophysiology ablation technology.

Just a month after the CyberHeart purchase, Varian scooped up Alicon and Endocare for $185 million. Combined, the two firms generated $30 million in revenue in 2018.

Based in Austin, Texas, Endocare develops hardware and software for cryoablation and microwave ablation. Its lead product—Cryocare CS, incorporates planning, placement, and treatment to simplify cryotherapy. Alicon is based in China and manufactured embolic therapy for liver cancer treatment; its signature product (Caligel) is used in more than 1,000 hospitals in the Middle Kingdom.

After a brief mid-summer respite, Varian shelled out $90 million for Boston Scientific Corp.’s embolics microspheres business, which developed treatments for arteriovenous malformation and hypervascular tumors. The deal covered Boston Scientific’s drug-loadable Oncozene and Embozene Tandem microsphere as well as bland embolic Embozene bead products. The Oncozene and Embozene microspheres are calibrated microspheres that are engineered to provide better embolization control and improved visualization during suspension.

$1.7 Billion ($1.8B total)
NO. OF EMPLOYEES: 4,600

In early 1999, Varian Associates changed its name to Varian Medical Systems after spinning off its semiconductor manufacturing equipment and scientific instruments businesses. Today, Varian Medical Systems manufactures integrated products for treating cancer and other conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. The company has tripled in size since 1999.

The company’s Oncology Systems business provides radiotherapy products for treating cancer and other conditions, as well as informatics software for managing comprehensive cancer clinics. Its products include linear accelerators, simulators, proton therapy systems and software tools for planning, verifying and delivering radiation, radiosurgical and brachytherapy treatments. The brachytherapy division manufactures products to treat cancer by temporarily inserting radiation sources within tumor sites. With its partner, BrainLAB (a provider of software for minimally invasive therapies and cancer treatment), Varian also produces technology for stereotactic radiosurgery and neurosurgery for the treatment of cancer and other disorders of the central nervous system.

Varian’s X-ray products business provides X-ray tubes and flat-panel X-ray image detectors for imaging primarily used in medical diagnostics, dental procedures and veterinary care. The company’s smallest division (revenues were broken out of total medical revenue) manufactures X-ray imaging products for cargo screening and industrial inspection.

Overall company revenue for fiscal 2007 (ended Sept. 30) was $1.8 billion, an increase of 11%. Net earnings were $239 million, down from $245 million in fiscal 2006. The company said costs associated with acquisitions during the fiscal year drove down earnings results. Fiscal 2007 also got off to a slow start due to customer purchasing delays and “new competitive challenges” in the first half of the year, company officials said.

Orders and revenue, however, were up across all product categories. Oncology Systems revenue increased 8% (though orders were sluggish), while X-ray product revenue increased 13%. Though not a medical-device producing division, the company’s X-ray security screening group grew revenue 135%, mostly as a result of an acquisition for the division.

Oncology Systems reported $1.4 billion in net revenue and $340 million in operating earnings, up from $319 million in 2006. X-ray revenues were $258 million, with operating earnings of $61 million, up from $44 million in 2006. “Other” revenue of $79 million primarily was the result of sales of X-rays for security screening.

For 2007, the company expanded to prepare for international growth and increases in orders, particularly for oncology products. Varian enlarged its global facilities footprint by more than 20% with a new 140,000-square-foot operation in Beijing, China that manufactures linear accelerators and new X-ray products. The company also completed a 100,000-square-foot expansion of its facility in Las Vegas, NV for an Oncology Systems customer-training center. The new center also will serve as headquarters for the company’s Security and Inspection Products group.

In 2007, Varian introduced RapidArc, a device that, according to the company, delivers image-guided, intensity-modulated radiation therapy (IMRT) up to five times faster and more precisely than conventional IMRT of helical tomotherapy. For patients, it means more comfortable treatments and fewer complications. Prostate cancer patients, for example, can receive a single treatment in less than four minutes, according to Varian. The device is able to target tumors from more angles, thus saving healthy tissue in the process while making only a single revolution of the treatment machine around the patient.  In January 2008, the FDA granted the RapidArc 510(k) clearance.

“RapidArc represents a major medical advance that will change the way radiation therapy is planned and delivered,” said Dow Wilson, president of Varian’s Oncology Systems business. “Our primary goal with this product is to improve clinical outcomes. In addition, we discovered that we could simultaneously improve treatment efficiency significantly. RapidArc should make better-quality radiotherapy a more affordable, more accessible treatment option, and enable more cancer patients to receive a higher standard of care.”

The FDA’s clearance for RapidArc covers the treatment hardware and the RapidArc treatment planning software module in the company’s Eclipse treatment planning system. Varian began delivery to customers in spring of this year.

For fiscal 2008, management expects revenue growth in the range of 15% to 16% compared with 2007. Net orders grew double digits for the company’s X-Ray Products business and its Oncology Systems business for the first half of the year.

$1.6 Billion
No. of Employees: 3,900

It wouldn’t take one of its imaging systems to create a clear picture of the impressive growth that Varian Medical has realized in the past year. Significant double-digit gains marked the company’s record fiscal 2006 performance. The company’s technology is focused on cancer therapies and X-ray imaging.

Varian’s Oncology Systems business manufactures systems for treating cancer with radiation, including hardware and software for image-guided radiation therapies, as well as brachytherapy (internal) radiotherapy (which involves placing seeds or sources in or near a tumor). Varian Surgical Sciences produces technology for stereotactic radiosurgery and neurosurgery for the treatment of cancer and other disorders of the central nervous system.

The company’s X-ray Products business manufactures X-ray tubes and flat-panel imagers for CT and other diagnostic imaging, mammography and radioscopic/fluoroscopic imaging.

Tim Guertin, who has been CEO about a year and a half, called 2006 a year of “major transition and rapid growth.”

For fiscal 2006 (ended Sept. 29), annual revenues grew 16% to $1.6 billion. Net earnings were $245 million, compared to $207 million in fiscal 2005.

“Robust demand for advanced products for image-guided radiotherapy (IGRT), stereotactic radiosurgery, brachytherapy and filmless X-ray imaging contributed to our growth in net orders, revenues and net earnings during the quarter and the fiscal year,” Guertin said. “We ended fiscal year 2006 on a particularly strong note that sets the stage for continued growth in fiscal year 2007 and beyond.”

Going forward, Guertin has outlined an ambitious plan to grow Varian into a $3 billion enterprise in the next five years.

The Oncology Systems division reported fiscal year net orders of $1.5 billion, up 13%, with 19% growth in North America and 6% growth in international markets. Gains in Europe were offset by a weak Asian market, the company said.

“North American cancer treatment centers are again leading a major market transition toward IGRT and image-guided radiosurgery,” Guertin added. “Our OBI [On-Board Imager] devices together with our linear accelerators are being used more commonly to target smaller tumors more precisely.”

The company said that, at the end of fiscal 2006, more than 325 installations of its OBI devices—which allow real-time imaging of tumors while on the treatment couch—were complete or in progress. Guertin said Varian’s Trilogy accelerator for both radiotherapy and radiosurgery, as well as our brachytherapy and software products, contributed significantly to the growth in net orders and revenues.

For the company’s X-ray sector, sales were $228 million, up 17%. Growth largely was driven by Varian’s flat-panel digital detectors for filmless X-ray imaging. During the quarter, the company completed construction of a new flat-panel production facility at its Salt Lake City, UT, manufacturing plant.

Fiscal 2007 is shaping up to be a growth year as well—two key acquisitions to date are aiding that growth. In January, Varian Medical completed the acquisition of Accel Instruments GmbH, a privately held supplier of scientific research instruments and proton therapy systems for cancer treatment based near Cologne, Germany. The company paid approximately $30 million.

“With Accel Instruments, we have the opportunity to build a several hundred million dollar business based on improving cancer care with a clinically practical and affordable system for proton therapy,” Guertin said following the purchase. In 2006, Accel had approximately $30 million in annual revenues.

In May, Varian completed the acquisition of Bio-Imaging Research, Inc., a supplier of X-ray imaging products for security and inspection. Varian paid approximately $21 million to acquire the privately held business based in Lincolnshire, IL, which will expand its non-medical X-ray business.

For the second quarter of 2007 (ended March 30), Varian Medical reported net earnings of $61 million, compared to $56 million for the same period in 2006. Revenues for the quarter rose 7% to $443 million, including $9 million from Accel Instruments.

Varian also reported that Oncology Systems revenues for the quarter were lower than expected due in large measure to a higher percentage of IGRT installations, which require greater site preparation and longer construction cycles. Guertin said the X-ray Products business continued to post excellent results with growth in orders, sales and profits in both tube and filmless X-ray detector product lines.

Due to low growth of orders in Oncology Systems for the first half of fiscal 2007 and longer average times in backlog, the company lowered guidance for the rest of fiscal 2007.  The company now expects growth in the low double digits above fiscal 2006. During the first quarter, Varian had predicted growth of 13% or more for the year.

$1.2 Billion ($41.3B Total)
No. of Employees: 3,600

As a leading manufacturer of X-ray tubes and digital image detectors for medical imaging, Varian Medical is doing quite well in the device industry and is the lone new joiner to make Medical Product Outsourcing’s list of the top 30 companies.

It may be tough to pinpoint exactly who was responsible for the success, since former Varian Chairman and CEO Richard Levy decided to retire in 2005. This year, in February, Tim Guertin, president of the company since 2005, added the CEO title to his cache. Along with this major shuffling was the move of Dow Wilson, former CEO of GE Healthcare Information Technologies business, into the slot of president for Varian’s Oncology Systems business.

All major players can be proud of Varian’s performance in 2005, as the company realized 10% growth in sales to reach a total of $1.2 billion.

Revenues were climbing upward all over Varian’s segments. Oncology Systems rose 10% to $1.1 billion, up from $1 billion in 2004, mainly due to strong international sales in Europe, Australia (along with New Zealand) and Japan. Giving a boost to the numbers was the launch of the ARIA Oncology Information System; a new version of the company’s Eclipse software; and the Varian Trilogy Accelerator, a radiation delivery system.

Along with the booming medical imaging market, the company has been capitalizing on the current trend of minimally invasive surgery. As such, sales of the company’s Brachytherapy (radioactive seeding) business increased 28% to $48 million.

Varian’s X-ray Products business also saw record numbers for 2005 with an 18% increase in sales to $195 million, helped by the introduction of 11 new X-ray tubes and by sales of the PaxScan product line. In anticipation of further growth in the X-ray market, Varian is planning to expand its X-ray products manufacturing plant in Salt Lake City, UT.

Numerous FDA approvals and product launches have helped advance Varian’s position in the market. In January 2005, Varian introduced the SG-1590 Tri-focus X-ray Tube, a direct replacement for use in special procedures equipment from Siemens Medical Solutions. Two months later, Varian received FDA 510(k) clearance for the Nasopharynx Applicator Set for Advanced Brachytherapy, designed for the delivery of localized radiation therapy in the upper throat area. In December, the company was cleared to launch its proton therapy eye dose calculation module, which has been made part of the company’s Eclipse treatment planning system.

To meet increasing global demand for its medical linear accelerators, Varian broke ground in Beijing, China with a new manufacturing facility to be run as a foreign-owned enterprise. “This important project expands Varian’s global manufacturing and service capability in the radiation therapy market with the greatest growth potential in the world,” said Guertin. The 134,000-square-foot plant is expected to be completed in March 2007.

In the quest for global success, the company evaluated its acquisition strategy and, in January 2005, added to its portfolio Sigma Micro Informatique Conseil, a supplier of information management software for radiation and medical oncology in cancer clinics and hospitals in France and other European nations. This move offered Varian the opportunity to provide French-speaking and other international clinics with information management technology that can help manage electronic health records for cancer patients. Varian expects the acquisition to yield $7 million in revenue this year.

If this year’s numbers are any indication, look for Varian to keep jumping up the list of top companies in coming years. Second-quarter 2006 net sales for the company reached an all-time record $414 million, up 18% from last year. Gains in the Oncology Systems segment increased by 18% as well, and the X-ray Products business bested all the numbers with a 21% increase.

“The second quarter was marked by strong revenue growth in our Oncology Systems and X-ray Products businesses, with solid contributions from some of our emerging businesses in brachytherapy and flat-panel digital image detectors for filmless X-rays,” said Guertin.

The company’s emerging business in digital image detectors nearly doubled during the quarter, which is on par for the demand in medical diagnostics and other scanning. X-ray tubes, particularly high-power anode-grounded CT tubes, are also adding greatly to Varian’s bottom line.

Varian has been a little more conservative in its expectations for the next quarter and final total 2006 numbers. Still, growth projections are in the 14% range.