2 unchanged sentences
See below for a discussion of the following principal risks and other risks that make an investment in Varex speculative or risky:
−Removed: • Our operations, cash flow, and financial position, and the demand for our security, industrial and inspection products, have been adversely impacted, and in the future could continue to be adversely impacted by the coronavirus (COVID-19) pandemic and associated economic disruptions.
+Added: • Our operations, cash flow, financial position, and the demand for certain of our products, have been adversely impacted, and in the future could continue to be adversely impacted by the coronavirus (COVID-19) pandemic and associated economic disruptions.
• We sell products and services to a limited number of OEM customers, many of which are also competitors, and a reduction in or loss of business of one or more of these customers may materially reduce our sales.
4 unchanged sentences
• A disruption at our manufacturing facilities, as well as fluctuating manufacturing costs, could materially and adversely affect its business.
−Removed: • The loss of a supplier or any inability to obtain supplies of important components could restrict our ability to manufacture products, cause product delivery delays, or significantly increase costs.
+Added: • Supply chain disruptions, including the loss of a supplier, and any inability to obtain supplies of important components could restrict our ability to manufacture products, cause product delivery delays, or significantly increase costs.
• Our international manufacturing operations subject us to volatility and other risks, including high security risks, which could result in harm to our employees and contractors or substantial costs.
20 unchanged sentences
While healthcare systems and economies around the world have begun to reopen, customer demand has not returned to pre-pandemic levels, and the adverse effects of COVID-19 on our financial statements and results of operations are expected to be more persistent, and have been more severe, than previously assumed.
−Removed: Specifically, we now believe that reduced demand in our Industrial segment and for certain higher end medical products will continue to depress our results of operations.
−Removed: In addition, new or continuing outbreaks of COVID-19 could lead to further decreases in demand for certain of our products.
−Removed: The actions taken to combat COVID-19 have had, and we believe will continue to have, a negative impact on our operating results, cash flows and financial condition.
+Added: Reduced demand for certain of our products could continue to depress our results of operations.
+Added: In addition, new or continuing outbreaks of COVID-19 could lead to future decreases in demand.
+Added: The actions taken to combat COVID-19 have had, and could continue to have, a negative impact on our operating results, cash flows and financial condition.
We believe that COVID-19’s adverse impact on our operating results, cash flows and financial condition will be primarily driven by:
6 unchanged sentences
Disruption in manufacturing, distribution, supply chain and other operations.
−Removed: In addition to adversely affecting demand for our products, COVID-19 and associated economic disruptions have had and could continue to have an adverse impact on our manufacturing capacity, supply chains and distribution systems, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking.
−Removed: For example, at our manufacturing facility in the Philippines, many employees have had significant difficulty getting to work, which caused the facility to operate at a decreased capacity and caused us to shift some manufacturing to another location.
+Added: In addition to adversely affecting demand for our products, COVID-19 and associated economic disruptions have had and we believe will continue to have an adverse impact on our manufacturing capacity, supply chains and distribution systems, including as a result of impacts associated with shortages in obtaining materials used to make our products and preventive and precautionary measures that we, other businesses, and governments are taking.
+Added: For example, at our manufacturing facility in the Philippines, many employees had significant difficulty getting to work, which caused the facility to operate at a decreased capacity and caused us to shift some manufacturing to another location.
A reduction or interruption in any of our manufacturing processes could have a material adverse effect on our business.
−Removed: Supply chain logistics have also become more challenging and could remain challenging and result in higher costs.
−Removed: Our ability to move unfinished goods and finished products around the world have been impacted by the decreased availability of global transportation networks.
+Added: Supply chain logistics have also become more challenging and could remain challenging and result in higher costs and efforts.
+Added: Our ability to move unfinished goods and finished products around the world have been impacted by the decreased availability of global transportation networks and increased costs.
In addition, regulatory approvals for certain of our products may continue to be delayed due to COVID-19 related closures.
Varex sells its products and services to a limited number of OEM customers, many of which are also its competitors, and a reduction in or loss of business of one or more of these customers may materially reduce its sales.
−Removed: Varex had one customer during the three months ended January 1, 2021 that accounted for 17% of its revenue.
−Removed: Varex’s ten largest customers as a group accounted for approximately 51% and 53% of its revenue for the three months ended January 1, 2021 and January 3, 2020, respectively.
+Added: Varex had one customer during the three months ended April 2, 2021 that accounted for 18% of its revenue.
+Added: Varex’s ten largest customers as a group accounted for approximately 52% and 53% of its revenue for the three months ended April 2, 2021 and April 3, 2020, respectively.
+Added: Varex’s ten largest customers as a group accounted for approximately 51% and 53% of its revenue for the six months ended April 2, 2021 and April 3, 2020, respectively.
Varex sells its products to a limited number of OEM customers, many of which are also its competitors with in-house X-ray component manufacturing operations.
Although Varex seeks to broaden its customer base, it will continue to depend on sales to a relatively small number of major customers.
−Removed: Because it often takes significant time to replace lost business, it is likely that Varex’s
−Removed: operating results would be materially and adversely affected if one or more of its major OEM customers were to cancel, delay, or reduce orders in the future.
+Added: Because it often takes significant time to replace lost business, it is likely that Varex’s operating results would be materially and adversely affected if one or more of its major OEM customers were to cancel, delay, or reduce orders in the future.
Furthermore, Varex generates significant accounts receivables from the sale of its products and the provision of services directly to its major customers.
11 unchanged sentences
Reductions in purchasing patterns have in the past and may in the future materially and adversely affect Varex’s operating results.
−Removed: Decreased economic activity associated with the COVID-19 pandemic has had a significant negative impact on the demand for our industrial products and that impact is likely to continue.
+Added: Decreased economic activity associated with the COVID-19 pandemic has had a significant negative impact on the demand for our industrial products and that impact could continue or return.
Varex competes in highly competitive markets, and it may lose business to its customers or other companies with greater resources or the ability to develop more effective technologies, or it could be forced to reduce its prices.
16 unchanged sentences
In addition, the timing of Varex’s competitors’ introduction of products into the market could affect the market acceptance and sales of Varex’s products.
−Removed: Some competitors offer specialized products that provide, or may be perceived by customers to provide, an advantage over Varex’s products.
+Added: Some competitors offer specialized
+Added: products that provide, or may be perceived by customers to provide, an advantage over Varex’s products.
Also, some of Varex’s non-U.S.
competitors may not be subject to the same standards, regulatory and/or other legal requirements to which Varex is subject and, therefore, they could have a competitive advantage in developing, manufacturing and marketing products and services.
−Removed: Any inability
−Removed: to develop, gain regulatory approval for and supply commercial quantities of competitive products to the market as quickly and effectively as Varex’s competitors could limit market acceptance of Varex’s products and reduce its sales.
+Added: Any inability to develop, gain regulatory approval for and supply commercial quantities of competitive products to the market as quickly and effectively as Varex’s competitors could limit market acceptance of Varex’s products and reduce its sales.
Any of these competitive factors could negatively and materially affect Varex’s pricing, sales, revenues, market share and gross margins and its ability to maintain or increase its operating margins.
29 unchanged sentences
Varex conducts business globally.
−Removed: Revenues generated from customers located outside the United States accounted for approximately 65% and 66% of Varex’s total revenues for the three months ended January 1, 2021 and January 3, 2020, respectively.
+Added: Revenues generated from customers located outside the United States accounted for approximately 66% and 69% of Varex’s total revenues for the three months ended April 2, 2021 and April 3, 2020, respectively.
+Added: Revenues generated from customers located outside the United States accounted for approximately 66% and 68% of Varex’s total revenues for the six months ended April 2, 2021 and April 3, 2020, respectively.
As a result, Varex must provide significant service and support globally.
92 unchanged sentences
Varex’s insurance coverage may prove to be inadequate, and future policies may not be available on acceptable terms or in sufficient amounts, if at all.
−Removed: If a material claim is not insured or is in excess of Varex’s
−Removed: insurance coverage, Varex could have to pay substantial damages, which could have a material and adverse effect on its financial position and/or results of operations.
+Added: If a material claim is not insured or is in excess of Varex’s insurance coverage, Varex could have to pay substantial damages, which could have a material and adverse effect on its financial position and/or results of operations.
Varex’s business may suffer if it is not able to hire and retain qualified personnel.
24 unchanged sentences
administration may also create global economic uncertainty, which may cause our customers to reduce their spending, which, in turn, could adversely affect our business, financial condition, operating results, and cash flows.
−Removed: An uncertain economic environment may also disrupt supply or affect our service business, as customers’ constrained budgets may result in pricing pressure, extended warranty provisions, and even cancellation of service contracts.
+Added: An uncertain economic environment may also disrupt supply or affect our service business, as customers’ constrained budgets may result in pricing pressure,
+Added: extended warranty provisions, and even cancellation of service contracts.
In addition, concerns over continued economic instability could make it more difficult for Varex to collect outstanding receivables.
10 unchanged sentences
Further, Varex’s security product revenues from oil-producing countries, in which Varex has a significant customer base, have in the past suffered as a result of volatility in oil prices and remain sensitive to fluctuations in the future.
−Removed: The loss of a supplier or any inability to obtain supplies of important components could restrict Varex’s ability to manufacture products, cause delays in its ability to deliver products, or significantly increase its costs.
+Added: Supply chain disruptions, including the loss of a supplier, and any inability to obtain supplies of important components could restrict Varex’s ability to manufacture products, cause delays in its ability to deliver products, or significantly increase its costs.
+Added: Supply chain disruptions have had, and will likely continue to have, an impact on Varex’s ability to manufacture its products.
+Added: Varex has experienced delays in receiving materials used to make its products due both to material shortages and shipping delays.
+Added: These delays are likely to continue.
+Added: If Varex is unable to obtain the materials necessary to make its products or must pay more for those materials, it could have a material adverse effect on Varex’s business and financial results.
Varex obtains from a limited group of suppliers or from sole-source suppliers some of the components included in its products, such as wave guides for industrial linear accelerators, transistor arrays, cesium iodide coatings and specialized integrated circuits for flat panel detectors, X-ray tube targets, housings, glass frames, high-voltage cable, bearings and various other components.
8 unchanged sentences
Any of these events could materially and adversely affect Varex’s business and financial results.
−Removed: If Varex decides to manufacturer a component that was previously purchased from an external supplier, it may not be able to manufacture such component as efficiently as an external supplier and may experience delays or problems in successfully transferring such manufacturing which could materially and adversely affect Varex’s ability to manufacture and supply products to customers.
+Added: If Varex decides to manufacturer a component that was previously purchased from an external supplier, Varex may not be able to manufacture the component as efficiently as the external supplier and may experience delays or problems in successfully manufacturing the component, which could materially and adversely affect Varex’s ability to manufacture and supply products to customers.
A shortage or change in source of, or increase in price of, raw materials could restrict Varex’s ability to manufacture products, cause delays, or significantly increase its cost of goods.
72 unchanged sentences
In some cases, products with substantial revenues may depend on these license rights.
−Removed: If Varex were to lose the rights to license these technologies, or its costs to license these technologies were to materially
−Removed: increase, its business would suffer.
+Added: If Varex were to lose the rights to license these technologies, or its costs to license these technologies were to materially increase, its business would suffer.
As Varex expands its manufacturing capabilities outside of the United States, more of Varex’s intellectual property may be held in jurisdictions that do not have robust intellectual property protections, which may make it harder for Varex to adequately protect its Intellectual Property.
71 unchanged sentences
Compliance with these laws and regulations is expensive and time-consuming, and failure to comply with these laws and regulations could materially and adversely affect Varex’s business.
−Removed: Generally, Varex’s manufacturing operations for medical devices, and those of its third-party manufacturers, are required to comply with the Quality System Regulations (“QSR”) of the FDA, as well as other federal and state regulations for medical devices and radiation-emitting products.
−Removed: The FDA makes announced and unannounced periodic and on-going inspections of medical device manufacturers to determine compliance with QSR and, in connection with these inspections, issues reports known as Form FDA 483 reports when the FDA believes the manufacturer has failed to comply with applicable regulations and/or procedures.
−Removed: If observations from the FDA issued on Form FDA 483 reports are not addressed and/or corrective action is not taken in a timely manner and to the FDA’s satisfaction, the FDA may issue a warning letter and/or proceed directly to other forms of enforcement action.
−Removed: Similarly, if a warning letter were issued, prompt corrective action to come into compliance would be required.
−Removed: Failure to respond in a timely manner to Form FDA 483 observations, a warning letter, or any 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 Varex’s production facilities, denial of importation rights to the United States for products manufactured in overseas locations, adverse publicity, and criminal and civil fines.
+Added: Generally, Varex’s manufacturing operations for medical devices, and those of its third-party manufacturers, are required to comply with the Quality System Regulations (“QSR”) of the FDA, as well as other federal and state regulations for medical devices
+Added: and radiation-emitting products.
+Added: The FDA, through authorized auditing organizations, makes announced and unannounced periodic and on-going inspections of medical device manufacturers to determine compliance with QSR and, in connection with these inspections, issues reports known as Form FDA 483 reports when the FDA believes the manufacturer has failed to comply with applicable regulations and/or procedures.
+Added: If Form FDA 483 reports are not addressed and/or corrective action is not taken in a timely manner and to the FDA’s satisfaction, the FDA may issue a warning letter and/or proceed directly to an enforcement action.
+Added: Failure to respond in a timely manner to a warning letter, or any 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 Varex’s production facilities, denial of importation rights to the United States for products manufactured in overseas locations, adverse publicity, and criminal and civil fines.
The expense and costs of any corrective actions that Varex may take, which may include product recalls, correction and removal of products from customer sites, and/or changes to its product manufacturing and quality systems, could materially and adversely impact Varex’s financial results and may also divert management resources, attention, and time.
69 unchanged sentences
Federal and state “false claims” laws generally prohibit knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other government payors that are false or fraudulent, or for items or services that were not provided as claimed.
−Removed: Although Varex does not submit claims directly to payors, manufacturers can be, and have been, held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by providing inaccurate billing or coding information to customers or through certain other activities, including promoting products for uses not approved or cleared by the FDA, which is
−Removed: called off-label promotion.
+Added: Although Varex does not submit claims directly to payors, manufacturers can be, and have been, held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by providing inaccurate billing or coding information to customers or through certain other activities, including promoting products for uses not approved or cleared by the FDA, which is called off-label promotion.
Violating “anti-kickback” and “false claims” laws can result in civil and criminal penalties, which can be substantial, as well as potential mandatory or discretionary exclusion from healthcare programs for noncompliance.
28 unchanged sentences
Varex may not be able to obtain the necessary clearances or approvals or may be unduly delayed in doing so, which could harm its business.
−Removed: Furthermore, even if Varex is granted regulatory clearances or approvals, they may include significant limitations on the indicated
−Removed: uses of the product, which may limit the market for the product.
+Added: Furthermore, even if Varex is granted regulatory clearances or approvals, they may include significant limitations on the indicated uses of the product, which may limit the market for the product.
If Varex is unable to obtain required FDA clearance or approval for a product or is unduly delayed in doing so, or the uses of that product were limited, Varex’s business could suffer.
11 unchanged sentences
New accounting pronouncements, or a change in interpretations of, or its application of, existing principles can have a significant effect on Varex’s reported results and may even affect its reporting of transactions completed before a change is announced.
−Removed: In addition, when Varex is required to adopt new accounting standards, Varex’s methods of accounting for certain items may change, which could cause its results of operations to fluctuate from period to period, make it more difficult to compare its financial results to prior periods, and could cause Varex to delay required filings under the Exchange Act.
+Added: In addition, when Varex is required to adopt new accounting standards, Varex’s methods of accounting for certain items may change, which could cause its
+Added: results of operations to fluctuate from period to period, make it more difficult to compare its financial results to prior periods, and could cause Varex to delay required filings under the Exchange Act.
As its operations evolve over time, Varex may introduce new products and/or new technologies that require Varex to apply different accounting principles, including ones regarding revenue recognition, than Varex has applied in past periods.
34 unchanged sentences
Varex has significant debt obligations that could adversely affect its business, profitability and ability to meet its obligations.
−Removed: As of January 1, 2021, Varex’s total combined indebtedness was approximately $513.8 million.
+Added: As of April 2, 2021, Varex’s total combined indebtedness was approximately $512.3 million.
The borrowings under Varex’s unsecured convertible senior notes due 2025 (the “Convertible Notes”) bear interest at a fixed rate of 4.00% and borrowings under Varex’s senior secured notes due 2027 (the “Senior Secured Notes”) bear interest at a fixed rate of 7.875%.
14 unchanged sentences
We and our subsidiaries may be able to incur substantial indebtedness in the future.
−Removed: As of January 1, 2021, we had approximately $100 million of additional available borrowing capacity (subject to borrowing base availability) under the new revolving credit agreement that we entered into on September 30, 2020 (the “Asset-Based Loan”, or "ABL Facility").
+Added: As of April 2, 2021, we had approximately $100 million of additional available borrowing capacity (subject to borrowing base availability) under the new revolving credit agreement that we entered into on September 30, 2020 (the “Asset-Based Loan”, or "ABL Facility").
In addition to any amounts that might be available to us for borrowing under the ABL Facility, subject to certain conditions, we will have the right to request an increase of aggregate commitments under the ABL Facility by an aggregate amount of up to $75 million by obtaining additional commitments either from one or more of the lenders under the ABL Facility or other lending institutions.
49 unchanged sentences
We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
−Removed: If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness,
−Removed: including the notes.
+Added: If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness, including the notes.
These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
86 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.