Varex Imaging (VREX), a leading provider of X-ray imaging components, is strategically leveraging its advanced photon-counting technology to expand its presence in the high-growth industrial non-destructive testing (NDT) market. While the company's third-quarter 2025 results revealed a GAAP operating loss, core operations showed resilience, with sustained R&D investments underscoring a strong commitment to innovation. This focus on next-generation technology, particularly for NDT applications, is a key component of the company's long-term growth strategy.
Varex's recent financial performance, which included a non-GAAP operating income of $16.6 million, indicates a stable core business despite a one-time goodwill impairment charge. The company’s continued investment in R&D, totaling $21.4 million in Q3 2025 alone, highlights its belief that technological innovation is the path to future profitability. This strategy is paying dividends in the industrial sector, which experienced a 1% year-over-year revenue increase in Q3.
The cornerstone of this strategy is Varex's photon-counting detectors, which utilize cadmium telluride (CdTe) to convert X-ray photons directly into electrical signals. This technology offers superior spatial resolution, reduced noise, and spectral imaging capabilities that are critical for advanced industrial NDT applications. These detectors, including the DC-Thor and DC-TDI series, are gaining traction in diverse fields such as battery inspection and cargo screening, where high-precision imaging is essential for quality control and security.
This focus is well-timed with a booming market. The global photon-counting X-ray detectors market, valued at $200 million in 2024, is projected to grow at a 10.5% CAGR to $500 million by 2033. Varex is particularly well-positioned to capitalize on this growth, especially in the Asia-Pacific region, where rapid industrialization is driving demand. The company's expanding footprint in these sectors was recently underscored by a significant $25 million order for cargo inspection systems.
Varex's competitive advantage lies in its dual-market focus on medical and industrial imaging and its cost-effective, CdTe-based detectors. While competitive challenges and supply chain risks persist, the company’s strategic partnerships with original equipment manufacturers (OEMs) and its ability to integrate AI into imaging workflows further differentiate its offerings. This approach, combined with a projected 3% sales growth for 2025 and a focus on high-growth niche markets like industrial NDT, positions Varex for a strong long-term outlook.
