Varex Imaging CorpVREX
Varex Imaging Corp Debt Disclosure
BORROWINGS
The following table summarizes the Company’s short-term and long-term debt:
| October 3, 2025 | September 27, 2024 | ||||||||||||||||||||||
| (In millions, except for percentages) | Amount | Amount | Contractual Interest Rate | Effective Interest Rate | |||||||||||||||||||
| Current maturities of long-term debt: | |||||||||||||||||||||||
| Convertible Senior Unsecured Notes | $ | — | $ | 45.0 | 4.0% | 4.8% | |||||||||||||||||
| Other debt | 1.5 | 1.5 | |||||||||||||||||||||
| Total current maturities of long-term debt | $ | 1.5 | $ | 46.5 | |||||||||||||||||||
| Non-current maturities of long-term debt: | |||||||||||||||||||||||
Convertible Senior Unsecured Notes(1) | $ | — | $ | 155.0 | 4.0% | 4.8% | |||||||||||||||||
| Senior Secured Notes | 368.0 | 243.0 | 7.9% | 8.2% | |||||||||||||||||||
| Other debt | 0.4 | 2.1 | |||||||||||||||||||||
| Total non-current maturities of long-term debt | $ | 368.4 | $ | 400.1 | |||||||||||||||||||
| Unamortized issuance costs and debt discounts: | |||||||||||||||||||||||
| Unamortized issuance costs - Convertible Notes | $ | — | $ | (1.0) | |||||||||||||||||||
| Unamortized issuance costs, net of debt premium - Senior Secured Notes | (2.4) | (2.2) | |||||||||||||||||||||
| Total unamortized issuance costs and debt discounts | (2.4) | (3.2) | |||||||||||||||||||||
| Total debt outstanding, net | $ | 367.5 | $ | 443.4 | |||||||||||||||||||
(1) This amount has been excluded from current liabilities as it is supported by the Revolving Credit Facility and restricted cash from the proceeds of the Senior Secured Notes Add On (as defined below), which are expected to remain outstanding for an uninterrupted period extending beyond one year from the balance sheet date.
Future principal payments of long-term debt outstanding as of October 3, 2025 are as follows:
| (In millions) | |||||
| Fiscal Years: | |||||
| 2026 | $ | 1.5 | |||
| 2027 | 368.4 | ||||
| 2028 | — | ||||
| 2029 | — | ||||
| 2030 | — | ||||
| Thereafter | — | ||||
| Total debt outstanding | $ | 369.9 | |||
| Less: current maturities of long-term debt | (1.5) | ||||
| Non-current portion of long-term debt | $ | 368.4 | |||
The following table summarizes the Company’s interest expense:
| Fiscal Years | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Contractual interest coupon and other | $ | 32.7 | $ | 26.8 | $ | 26.7 | |||||||||||
| Amortization of debt issuance costs | 2.8 | 3.4 | 2.6 | ||||||||||||||
| Total interest expense | $ | 35.5 | $ | 30.2 | $ | 29.3 | |||||||||||
Senior Secured Revolving Credit Facility
On March 26, 2024, the Company entered into a senior secured revolving credit agreement (the "Credit Agreement") providing for a senior secured revolving credit facility of up to $155.0 million (the “Revolving Credit Facility”). Simultaneous with its entry into the Revolving Credit Facility, the Company terminated its $100.0 million asset-based loan revolving credit facility (the "ABL Facility"), dated as of September 30, 2020. As of October 3, 2025, the Revolving Credit Facility remains undrawn.
The maximum availability under the Revolving Credit Facility is $155.0 million, which is available to the Company for revolving loans in U.S. dollars and for the issuance of letters of credit. As of October 3, 2025, the amount available under the Revolving Credit Facility was $154.8 million. The Company may make and repay borrowings from time to time until the maturity of the Revolving Credit Facility. Borrowings under the Revolving Credit Facility will mature, and lending commitments thereunder will terminate, on September 26, 2027. The interest rate for Revolving Credit Facility borrowings is the Secured Overnight Financing Rate (“SOFR”) (subject to a floor of 0.00%) plus a margin of 2.00% to 2.75%, depending on the consolidated total net leverage ratio of the Company (as defined in the Credit Agreement). Alternatively, the Company has the option of selecting a base rate equal to the highest of (a) the prime rate, (b) the Federal Funds Rate plus 0.50% and (c) the one-month SOFR (subject to a floor of 0.00%) plus a margin of 1.00%. A Base Rate Loan also has an additional margin of 1.00% to 1.75%. depending on the consolidated total net leverage ratio of the Company at that time. An unused commitment fee of 0.375% per annum was payable from March 26, 2024 until June 28, 2024, and thereafter an unused commitment fee of between 0.30% to 0.40% per annum is payable quarterly on the actual daily unused portion of the Revolving Credit Facility, depending on the consolidated total net leverage ratio of the Company.
Debt issuance costs, including unamortized deferred costs for continuing lenders under the previously existing ABL Facility, of $2.3 million were capitalized and are included within other assets on the Consolidated Balance Sheets. These costs will be amortized over the term of the new agreement and will be recorded within interest expense in the Consolidated Statements of Operations.
The Credit Agreement contains customary covenants restricting the Company’s activities, as well as those of its subsidiaries, including limitations on the ability to sell assets, engage in mergers, or other fundamental changes, enter into capital leases or certain leases not in the ordinary course of business, enter into transactions involving related parties or derivatives, incur or prepay indebtedness, grant liens or negative pledges on its assets, make loans or other investments, pay dividends or repurchase stock or other securities, guarantee third-party obligations, engage in sale leasebacks, and make changes in its corporate structure, though there are certain exceptions and carveouts related to these restrictions. One such covenant involves maintaining compensating cash balances. The Company must maintain with the Cash Management Banks (as defined in the Credit Agreement) one or more accounts and/or Bank Products (as defined in the Credit Agreement) at least 80% of its U.S. cash availability. The compensating balances may be
withdrawn but the availability of the Revolving Credit Facility is dependent upon maintenance of such compensating balances. In addition, the Credit Agreement includes financial covenants related to the Company’s consolidated total net leverage ratio and its consolidated fixed charge coverage ratio.
The Company’s obligations under the Revolving Credit Facility are guaranteed by the Company and a number of Company subsidiaries. These guarantees are secured on a first lien basis by specified assets, including inventory, accounts receivable, cash, intercompany accounts and loans, and certain real property. In addition, the Revolving Credit Facility is secured by second liens on certain assets securing the Company’s 7.875% Senior Secured Notes due 2027. An intercreditor agreement governs how the collateral securing the respective debt obligations will be treated among the secured parties.
Equipment Credit Agreement
On April 26, 2024, the Company entered into a secured delayed draw term loan credit agreement (the “Equipment Credit Agreement”), providing for a secured equipment credit facility of up to $20.0 million (the “Equipment Credit Facility”). On December 20, 2024, the Company terminated the Equipment Credit Agreement and recognized $0.1 million of the remaining unamortized issuance costs in interest expense in the Consolidated Statements of Operations. There was no principal balance outstanding under the Equipment Credit Facility when it was terminated.
Convertible Senior Unsecured Notes
On June 9, 2020, Varex issued $200.0 million in aggregate principal amount of 4.00% Convertible Senior Unsecured Notes due 2025 (“Convertible Notes”). The net proceeds from the issuance of the Convertible Notes, after deducting transaction fees and offering expense payable by the Company, were approximately $193.1 million. The Convertible Notes bore interest at the annual rate of 4.00%, payable semiannually on June 1 and December 1 of each year. On June 1, 2025, the Convertible Notes matured and were settled using $200.0 million in cash.
Call Spread
On June 4, 2020 and June 5, 2020, Varex entered into privately negotiated warrant transactions (collectively, the “Warrant Transactions”), whereby the Company sold warrants at a higher strike price relating to the same number of shares of Varex common stock that initially underlie the Convertible Notes, subject to customary anti-dilution adjustments. The initial strike price of the warrants is $24.975 per share (subject to adjustment under the terms of the Warrant Transactions), which was 50% above the last reported sale price of Varex common stock on June 4, 2020. The Warrant Transactions could have a dilutive effect to the Company's stockholders to the extent that the market price per share of Varex common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants. The number of shares underlying the Warrant Transactions is 9.6 million. The number of warrants outstanding as of October 3, 2025 was 9.6 million. The warrants expire after a 90 day trading period (as described in the warrant agreements) that begins on September 2, 2025.
Senior Secured Notes
Varex issued $300.0 million aggregate principal amount of 7.875% Senior Secured Notes due 2027 (the "Senior Secured Notes") pursuant to an indenture dated September 30, 2020. Interest payments are paid semiannually on April 15 and October 15 of each year, beginning on April 15, 2021. The Senior Secured Notes will mature on October 15, 2027, unless earlier redeemed or repurchased by Varex. On July 15, 2021, we redeemed $30.0 million, and on March 18, 2022, we redeemed $27.0 million of the Senior Secured Notes.
On December 20, 2024, the Company issued an additional $125.0 million of Senior Secured Notes (the "Senior Secured Notes Add On") pursuant to the Base Indenture, as supplemented by a supplemental indenture, dated December 20, 2024. The net proceeds from the Senior Secured Notes Add On after initial purchasers’ premium, commissions, estimated fees, accrued interest in arrears, and expenses of $1.1 million, were approximately $123.9 million. The Company used the proceeds from the offering to repay a portion of the Convertible Notes on their maturity date of June 1, 2025. As of October 3, 2025, the aggregate principal amount of the outstanding Senior Secured Notes was $368.0 million.
The Senior Secured Notes are secured by a first priority lien on substantially all of the assets of Varex and the assets and capital stock of its subsidiary guarantors (subject to exceptions), except for assets for which a first priority security interest is pledged for the Revolving Credit Facility, in which the Senior Secured Notes have a second lien security interest. The Senior Secured Notes include negative covenants, subject to certain exceptions, restricting or limiting Varex's ability and the ability of its restricted subsidiaries to, among other things, incur liens on collateral; sell certain assets; incur additional indebtedness; pay dividends; issue preferred shares; consolidate, merge, or sell all or substantially all of its assets; and enter into certain transactions with their affiliates.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 18, 2025 | Showing above |
| 2024 | Nov 19, 2024 | |
| 2023 | Nov 16, 2023 | |
| 2022 | Nov 18, 2022 | |
| 2021 | Nov 19, 2021 | |
| 2020 | Nov 30, 2020 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.