(Reuters) - Medical device maker Varian Medical Systems Inc (VAR.N) reported lower-than-expected fourth-quarter results as demand for its products fell due to uncertainties related to U.S. healthcare reforms and reimbursement cuts.
Shares of the company, which also slashed its earnings forecast for year ending September 2014, were down about 7 percent in extended trading.
Varian’s oncology unit which contributes nearly a third of its revenue, fell 1 percent as a larger number of customers did not upgrade their treatment systems as expected.
Gross orders for oncology systems declined 6 percent in North America.
Oncology systems’ net orders fell 13 percent to $685 million including backlog adjustment. The company’s backlog was down by $156 million.
The higher level of cancellations was primarily by small free-standing clinic developers whose projects did not move forward, chief executive Dow Wilson said on a conference call.
Varian’s customers include university research and community hospitals, private and governmental institutions, healthcare agencies, doctors’ offices and cancer care clinics.
The company’s fourth-quarter net earnings fell 2.4 percent to $117.3 million or $1.08 per share.
Fourth-quarter net income fell to $117.3 million, or $1.08 per share, from $120.2 million, or $1.08 per share, a year earlier.
Total revenue in the fourth quarter rose 2 percent to $770 million.
Analysts on average expected a profit of $1.12 per share on revenue of $779 million, according to Thomson Reuters I/B/E/S.
The company expects to earn $4.22 to $4.34 per share in 2014, below analysts’ average estimate of $4.48.
Reporting By Adithya Venkatesan; Editing by Don Sebastian