Varian Medical Systems (VAR) recently announced 510(k) clearance, granted by the Food and Drug Administration (“FDA”), for its surface beacon transponder, which can be utilized with the company’s Calypso know-how as a timely tracking device. This device has the ability to keep track of movement during radiotherapy care, at any anatomical location.
The transponder is positioned, for a period of time, on the human skin for timely monitoring of breathing as well as other movement during treatment. This technology vastly increases the set of cancerous locations for which the Calypso know-how can be utilized. It is intended to enhance targeting of certain common forms of cancer.
Varian took over Calypso in late 2011. The takeover was prompted by the company’s decision to strengthen its timely tracking devices designed to improve the accuracy of radiotherapy care.
Varian is a leading manufacturer of integrated radiotherapy systems for treating cancer and a premier supplier of X-ray tubes for diagnostic imaging applications. The company operates in a technology-driven environment where success depends on the use of new technology, product development and upgrades. In the radiation oncology market, Varian competes with Accuray (ARAY).
Varian is poised to increase its market share in radiation oncology. It is currently enjoying a healthy demand for its coveted TrueBeam technology, which is meaningfully contributing to its net order oncology growth.
Moreover, Varian enjoys a strong balance sheet marked by minimal debt and sizeable cash. The company uses a part of its healthy cash flows for share repurchases.
However, Varian competes with larger players in a technology-intensive industry. Further, uncertainties stemming from health care reform and a still weak hospital capital spending environment across many developed countries, especially in Europe, are significant challenges. We currently have a long-term Neutral rating on Varian supported by a short-term Zacks #3 rank (Hold).
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