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OSI Systems, Inc. (OSIS) Q1 2027 Earnings Call October 29, 2026 4:30 PM EDT

Company Participants

Alan Edrick - Executive VP & CFO
Ajay Mehra - President, CEO & Director

Conference Call Participants

Josh Nichols - B. Riley Securities, Inc., Research Division
John Godyn - Citigroup Inc., Research Division
Christopher Glynn - Oppenheimer & Co. Inc., Research Division
Lawrence Solow - CJS Securities, Inc.
Seth Seifman - JPMorgan Chase & Co, Research Division
Jeff Martin - ROTH Capital Partners, LLC, Research Division

Presentation

Operator

Good day, and thank you for standing by. Welcome to the OSI Systems, Inc. First Quarter Fiscal 2027 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Alan Edrick, Chief Financial Officer. Sir, please go ahead.

Alan Edrick
Executive VP & CFO

Well, thank you. Good afternoon, and thank you for joining us. I'm Alan Edrick, Executive Vice President and CFO of OSI Systems, and I'm here today with Ajay Mehra, OSI's President and CEO. Welcome to the OSI Systems Fiscal '27 First Quarter Conference Call. We are pleased that you can join us as we review our financial and our operational results.

Today's discussion will include forward-looking statements, and the company wishes to take advantage of the safe harbor provision of the Private Securities Litigation Reform Act of 1995 with respect to such statements. All forward-looking statements made in this call are based on currently available information, and the company undertakes no obligation to update any forward-looking statement based on subsequent events or new information or otherwise. We will also reference both GAAP and non-GAAP financial measures. Applicable reconciliations are available in today's earnings release.

On our August call, we told you three things about fiscal '27, that we have built our guidance factoring

OSI Systems (NASDAQ:OSIS) reported first-quarter financial results on Thursday. The transcript from the company’s first-quarter earnings call has been provided below.

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SummaryOSI Systems, Inc. reported a record Q1 revenue of $403 million, a 5% increase year-over-year, with adjusted EPS reaching $1.66, a 17% rise.

The company achieved a strong book-to-bill ratio of 1.4, increasing its backlog to a record $2.1 billion, supported by significant contracts in the Security division.

Despite geopolitical challenges, especially in the Middle East, OSI Systems maintained its fiscal 2027 revenue guidance and raised its non-GAAP EPS guidance due to favorable impacts from share repurchases.

The Security division saw a 4% revenue increase, while Optoelectronics grew 9%, with Healthcare facing a 14% decline due to reduced patient monitoring sales.

Strategic focus areas include expanding service revenue, winning significant contracts, and preparing for the LA28 Olympic Games, with a long-term goal of margin expansion.

Operating cash flow more than doubled from the previous year to $37 million, with free cash flow exceeding net income.

Management remains cautious yet optimistic given the current high backlog and opportunities for future security contracts.

Full TranscriptOPERATOR

Good day and thank you for standing by. Welcome to the OSI Systems, Inc. first quarter fiscal 2027 earnings conference call. At this time all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during this session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Allen Edrick, Chief Financial Officer. Sir, please go ahead.

Alan Edrick (Chief Financial Officer)

Well, thank you. Good afternoon and thank you for joining us. I’m Alan Edrick, Executive Vice President and CFO of OSI Systems and I’m here today with AJ Mehra, OSI’s President and CEO. Welcome to the OSI Systems fiscal 2027 first quarter conference call. We are pleased that you can join us as we review our financial and our operational results. Today’s discussion will include forward-looking statements and the company wishes to take advantage of the safe harbor provision of the Private Securities Litigation Reform Act of 1995 with respect to such statements. All forward-looking statements made in this call are based on currently available information and the company undertakes no obligation to update any forward-looking statement based on subsequent events or new information or otherwise.

We will also reference both GAAP and non-GAAP financial measures. Applicable reconciliations are available in today’s earnings release. On our August call we told you three things about fiscal 2027: that we had built our guidance factoring in the situation in the Middle East, that we expected growth to be strongest in the second half, and that we expected free cash flow to exceed net income. These three factors will frame our discussion this quarter. First quarter revenues were 403 million, representing a Q1 record, up 5% year over year, and adjusted earnings per diluted share grew to a first quarter record of $1.66, up 17% year over year.

Operating cash flow at 37 million, more than double the same prior year quarter, and free cash flow, which is operating cash flow less capital expenditures, was approximately 30 million, about 120% of GAAP net income. Q1 bookings were strong, our book-to-bill ratio was 1.4, and our backlog increased to a record 2.1 billion from approximately 1.9 billion at June 30th. I also want to be direct about certain reported figures for the first fiscal quarter. A meaningful part of our EPS growth this quarter came from below the operating line with lower net interest expense and a lower share count, and I’ll quantify those for you later in this call. Margins were impacted by a revenue decline in the Healthcare division and the mix of revenues in Security, both of which AJ and I will address. But before diving more deeply into our financial results and discussing our outlook for fiscal 2027, I’m going to turn the call over to A.J.

AJ Mehra (President and Chief Executive Officer)

Thank you, Alan, and thanks to all of you for joining us today. As Alan mentioned, we achieved record fiscal first quarter revenues and earnings per share. Order activity was strong, resulting in a book-to-bill ratio of 1.4, which increased our backlog to a record 2.1 billion. The first quarter played out largely as we outlined on our last call. Bookings were strong, backlog grew to a new all-time high, and we remain on track for a stronger second half of fiscal 2027.

Now let me turn to our three divisions starting with Security. Q1 revenues were 264 million, up 4% year over year. Despite a challenging geopolitical environment, including the conflict in the Middle East which continues to affect activity in the region, we continue to work closely with our customers there to support their ongoing needs. As anticipated, the transition of our Mexico program affected year-over-year comparisons consistent with our initial fiscal 2027 outlook.

That said, Security’s bookings were strong and the division ended the quarter with a record backlog. Let me share a few highlights from the quarter. During the quarter we announced two five-year IDIQ contracts awarded by U.S. Customs and Border Protection, one with a ceiling of approximately 200 million for our relocatable Rapiscan Passenger Vehicle Inspection systems and a second with a ceiling of about 85 million for van-mounted mobile X-ray inspection systems. We have received initial delivery orders totaling approximately 21 million under these contracts and expect more orders as we start delivering.

To be clear, only firm orders rather than ceiling values are included in our backlog figures. Our RF business is performing exceptionally well. We continue to execute on our Homeland Defense over-the-horizon radar contract that was awarded last fiscal year, which has a not-to-exceed value of approximately 235 million and is our largest RF award to date. Together with our participation in the SHIELD IDIQ which supports a number of Golden Dome-related initiatives, this award positions us well to compete for additional contracts in the future.

In Q1 we announced further bookings in this business line totaling approximately 90 million. Also, customer engagement across our RF portfolio remains at very high levels. Growing recurring revenues remains a priority. We continue to expect strong double-digit service revenue growth in fiscal 2027, with growth accelerating throughout the year. Given the size of our installed base, we expect service to become a larger part of our revenue mix over time, which should support margin expansion. While Security margins can vary from quarter to quarter with product and program mix, our long-term objective continues to focus on pairing growth with margin expansion as higher-margin service revenue becomes a larger part of our business.

We are also preparing for our role as official physical screening and security technology hardware and software solutions provider of the LA28 Olympic and Paralympic Games and an official supporter of Team USA. This is expected to be the largest sporting event in history. Furthermore, our experience at the FIFA World Cup, the Paris Olympics, and the Milan Winter Olympics, among many other global events, is vital to our success here, and we also see LA28 as a platform to showcase our offerings and compete for future large venue and event security opportunities.

Turning to our Optoelectronics and Manufacturing division, Opto delivered another strong quarter. Revenues including intercompany sales were at a first fiscal quarter record of 120 million, up 9% year over year, with sales to third-party customers up even higher at 16% year over year. During the quarter, revenue growth was paired with operating margin expansion. Bookings were robust across our EMS, flex circuit, and optoelectronics product lines, and the division closed the quarter with its highest quarter-end backlog.

Our long-standing OEM relationships, vertically integrated model, customized offerings, and global manufacturing footprint across North America, Europe, and Southeast Asia continue to serve customers well in aerospace, defense, healthcare, and industrial markets, particularly as they further diversify their supply chains. Finally, Healthcare faced a challenging quarter. Revenue declined 14% year over year primarily due to lower patient monitoring sales. As hospitals continue to manage capital spending carefully, we remain focused on supporting our installed base, improving operational efficiency, and completing the development of our next-generation monitoring platform. We expect Healthcare to return to growth in the upcoming quarters.

In summary, our demand remains robust with a 1.4 book-to-bill ratio, a well-diversified 2.1 billion backlog, established CBP contract vehicles, promising additional U.S. government opportunities, a growing RF pipeline, and continued expansion in our Optoelectronics division. Looking forward, we are focused on disciplined execution, converting our backlog into revenue, improving Healthcare, and driving margin expansion across our business. I want to thank our employees, customers, and stockholders for their continued support.

With that, I will turn the call back over to Alan to discuss our financial results and updated fiscal 2027 guidance in more detail before we open the call. Questions? Thank you.

Alan Edrick (Chief Financial Officer)

Thank you, AJ, so let’s begin with our revenue performance. Product revenues grew 5% year over year to 290 million and service revenues grew 4% to 114 million. By division, as AJ mentioned, Opto grew 9% including intersegment sales and 16% to external third-party customers. Security grew 4% and healthcare declined 14%. We said on the last call that we expected the Mexico program transition would be a headwind of less than 25 million in fiscal 27, concentrated in the first half. In the first quarter that headwind was approximately 8 million, consistent with that outlook, and we anticipate in Q2 this amount to be approximately 11 million. And although service revenue growth was modest in Q1 but in line with our expectations, as AJ said, we expect strong double-digit growth in fiscal 27 service revenues led by the Security division, driven by a significant number of products rolling off warranty, aviation service, SaaS, and increasing RF business, among other items.

Our Q1 fiscal 27 gross margin was 30.7% compared to 32.0% in the first quarter of last year. The variance was primarily driven by the decline in healthcare division sales, which carry the highest gross margin of our three divisions. In addition, the strength of Opto division sales, which carry the lowest gross margin of the three divisions—though operating margins are solid—impacted us, and a less favorable mix of revenues this quarter within the Security division.

As we noted in the past, our margins can fluctuate based on product and service mix, volume, supply chain costs, foreign exchange, tariffs, and other factors. We expect gross margin to increase over the balance of the year on higher overall revenues, including greater growth in higher-margin service revenues. Moving on to operating expenses, we continue to work diligently across all divisions to manage our SG&A cost structure efficiently. In Q1, SG&A was $69 million or 17.0% of sales, compared with 17.4% of sales a year ago. R&D expenses in Q1 were 19.4 million or 4.8% of revenue. We continue to invest substantial resources consistent with our commitment to innovation and positioning OSI Systems well for the future. Total operating expenses, excluding restructuring and other costs, declined to 21.8% of sales in Q1 this year from 22.7% in the same quarter of the prior year.

Now moving below the operating line, interest and other expenses in fiscal Q1 were $3.3 million compared with 7.4 million in the same quarter of the prior year. This 4.1 million improvement was primarily due to reduced borrowing costs coupled with increased investment income on higher cash and short-term investment balances. Our effective tax rate under GAAP was 18.8% in Q1 of fiscal 27 compared to 19.9% in Q1 last year. Excluding discrete items, the normalized effective tax rate, which is the rate we use in calculating non-GAAP EPS, was 22.9% in Q1 compared to 23.3% in the same prior-year quarter.

On a non-GAAP basis, our Q1 fiscal 27 adjusted operating margin was 9.5% compared to 10.3% in the prior year. First fiscal quarter by division, non-GAAP operating margin was 12.6% in Security, 12.1% in Opto, and negative 1.8% in healthcare. While we saw adjusted operating margin expansion in the Opto division, the operating loss in the healthcare division and less favorable Security division mix drove the consolidated change. We anticipate stronger operating margins for the balance of fiscal 27 in each division and for OSI overall.

Moving to cash flow and the balance sheet, we generated $37 million of operating cash flow in Q1 this year compared to 17 million in last year’s Q1. Accounts receivable at September 30 were 18 million lower than at June 30, given Q1 revenues are historically lighter than Q4, while unbilled receivables rose 34 million as we recognized revenue on certain Security contracts ahead of billing milestones. The receivable balance from our largest customer in Mexico slightly declined from June to September as collections modestly outpaced revenue following significant Q4 collections.

We continue to expect this receivable to decrease significantly by the end of fiscal 27, contributing to expected strong annual free cash flow. Inventories increased $48 million during the quarter to $463 million to support strong second-half scheduled deliveries from our backlog. Capex in the first quarter was 7.7 million, while depreciation and amortization in the quarter was 9.0 million. During Q1 we repurchased approximately 306,000 shares at an average price of about $204 for approximately $62 million. Our board in August increased the authorization for stock repurchases by an additional 1,000,000 shares, and at the end of Q1 approximately 773,000 shares were available under the repurchase program. Our priorities remain organic investment, strategic acquisitions, opportunistic repurchases, and maintaining a strong balance sheet.

Q1 diluted shares were 16.3 million compared with 17.5 million a year ago, a 7% reduction reflecting the repurchase and retirement of shares over the past year. Our balance sheet remains solid, providing us with significant flexibility. We ended the quarter with $236 million in cash and cash equivalents and $66 million in short-term investments, approximately $302 million in total, with total debt of approximately $1.0 billion and no amounts drawn under our bank lines of credit.

With the capital returned to shareholders during Q1 through stock buybacks, net leverage under our credit agreement was approximately 2.3. Over 90% of our debt is at fixed rates, which limits our borrowing cost sensitivity to higher short-term interest rates. Now turning to our guidance, we are raising our fiscal 2027 non-GAAP EPS guidance while reaffirming our fiscal 27 revenue guidance of 1.875 billion to 1.930 billion. We now expect non-GAAP EPS of $11.28 to $11.64, representing 9% to 12.5% year over year growth. The expected increase primarily reflects the favorable impact to EPS of stock repurchases made in Q1. As we said in August, we continue to expect revenue growth to be strongest in the second half of the fiscal year.

We expect second quarter revenues to be modestly down year over year as Q2 represents the toughest Middle East comp, with sizable revenues in the prior-year period before the conflicts began, along with the Mexico impact previously discussed. H2 revenue growth is underpinned by the timing of the expected conversion of our sizable backlog and a healthy funnel of new opportunities, coupled with a significant year over year growth expected in Security service revenues that we have previously discussed.

We also continue to expect free cash flow to exceed net income for the full fiscal year. Our guidance excludes potential impairment, restructuring and other costs, amortization of acquired intangible assets and their associated tax effects, and discrete tax and other nonrecurring items. Actual results could vary from guidance due to the timing of backlog conversion, new bookings, cash collections, tariffs, the conflicts in the Middle East, U.S. Government funding and procurement timing, interest rates, and supply chain disruptions, among other factors discussed in our SEC filings.

In summary, we began fiscal 27 with record first quarter revenues, strong bookings, a record backlog, and cash generation running ahead of last year. We thank the entire global OSI team for their dedication, and at this time we’d like to open the call to questions.

OPERATOR

Thank you. As a reminder, to ask a question, please press star-1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star-1-1 again. One moment while we compile our Q&A roster. Our first question is going to come from the line of Josh Nichols with B. Riley Securities. Your line is open. Please go ahead.

Josh Nichols (Analyst)

Yeah, thanks for taking my question, and great to see the backlog well above 2 billion for the first time with a strong book-to-bill, EPS obviously moving up higher. I know you’re reiterating the top-line revenue guidance, but just with the backlog increase, I was just curious, is part of that just being some conservatism given that there’s already a second half weighting to the outlook? Or is this something that you think these new orders that you got are really just going to increase visibility for the company when you think about, like, fiscal 28, 29, and the timing of those deliveries?

Alan Edrick (Chief Financial Officer)

Josh, this is Alan. Great question, and we’re really pleased with the record level of backlog that we have. Going into our guidance, with still conflicts going on in the Middle East and other geopolitical events, we just thought it prudent to maintain that revenue guidance at this time. Surely there is upside, and it sets us up quite nicely as we enter fiscal 28 and beyond as well.

Josh Nichols (Analyst)

Yep. And then just for a little bit more context, I’m guessing probably not, but was any of those Middle East orders that caused the one-time hiccup in last quarter, was any of that shipped, or are you still expecting that to come in in the second half? And is there anything else big that you guys have been working on that you expect may come to fruition in terms of the order pipeline generally?

Alan Edrick (Chief Financial Officer)

Yeah. Another good question, Josh. It’s Alan. We mentioned last time there was roughly 50 million pushed out of our fourth quarter. During our Q1 we shipped and recognized revenue of about 8 million of that. I think last time we said we expected the balance to mostly be in the second half of this year and even into fiscal 28, and that’s still currently our expectation.

AJ Mehra (President and Chief Executive Officer)

Yeah. This is AJ. Just to add on, in terms of orders, even with the Middle East situation, we had a great book-to-bill ratio. Orders are materializing at other places, and as I said, I think previously as well, as hopefully when the conflict ends, usually in the long run it’s an opportunity for us to get a lot more orders as people become more and more conscious of security around infrastructure and military facilities.

Josh Nichols (Analyst)

Yeah, I appreciate that. That’s a good point we’re taking note of. I’ll jump back in the queue, let someone else take a turn. Appreciate it. Thanks, guys. Good to see the progress here.

OPERATOR

Thank you. Thank you, and one moment for our next question. Our next question will come from the line of John Godden with Citigroup. Your line is open. Please go ahead.

John Godden (Analyst)

Hey guys, thanks for taking my question. I wanted to just talk a little bit about, or hope you can elaborate a little bit on, what’s going on with services revenues. I think everybody is excited on the growth there, what it means for margins over time. It seems like there is a little bit of a blip, but you guys are confident that that mix is going to improve through the balance of the year in the Security division? Any color you could provide would be great.

Alan Edrick (Chief Financial Officer)

Sure. John, this is Alan. Good question. Yeah. While our service revenue growth was modest at around 5% in Q1, we see a significant pickup year over year in each of Q2, Q3, and Q4. And that’s really underpinned by looking at the rollout of our products that we’ve installed coming off of warranty—that’s a big part of it—some of the aviation service revenue that we’re doing, some of the SaaS revenue, such as SIR Scan, some increasing revenue with our RF business, and some various other items.

So we actually have some very good visibility into the service revenue growth, which gives us a high degree of confidence for that strong double-digit growth in service revenue commencing really this quarter in Q2 and getting even stronger in the second half.

John Godden (Analyst)

Got it. Great. That’s very helpful. And if I could ask one more on the Middle East, you know, just reflecting what’s out there in the news. You know, there is this concern of an escalation after the midterms. I just was hoping to think through that with you guys. If there was a dramatic escalation event, how might that impact your thinking? How might you guide investors to kind of think through the impact on the business?

AJ Mehra (President and Chief Executive Officer)

So I think, you know, as I said, in the long run, obviously any, unfortunately, any conflict does benefit us with increased security requirements. I think in the, you know, we’ve taken into account as much as possible what we think is going to happen. But obviously we don’t have a crystal ball like anybody else. So we’ll wait and see. But from what we know right now, we feel confident in what we think is going to happen over the next three quarters.

OPERATOR

Thank you. And one moment for our next question. Our next question will come from the line of Christopher Glynn with Oppenheimer and Company. Your line is open. Please go ahead.

Christopher Glynn (Analyst)

Hey, thanks. Good afternoon, guys. Want to ask a little bit about the RF business. You talked about growing RF pipeline and notwithstanding the large bookings you’ve had, you know, I know there’s a lot of classified work you do there, but curious if you could talk about the competitive landscape a little bit more about the differentiation that’s winning, how unique is the offering and how dependent are the CERB programs on you guys? Singularly.

AJ Mehra (President and Chief Executive Officer)

So this is AJ. You know, as we said previously, you know, it’s the kind of business we’re pretty restricted what we can say or not say. But I will tell you that our offerings are regarded very favorably by customers. We have some very unique products that others do not have. And, you know, in certain areas, we definitely do dominate the market. So I think that without getting into specifics, we feel very good about our prospects going forward. And as I said in my prepared remarks, we are definitely very much talking to customers and discussing opportunities as we move forward.

Christopher Glynn (Analyst)

Great. And just in terms of those large orders, the 235 and the 90 million, curious how that’s pacing to orders. I think it’s a little more upfront than the CBP orders, but just kind of curious.

Alan Edrick (Chief Financial Officer)

Chris, this is Alan. Yeah, so exciting for us. We are recognizing revenue on that $235 million contract as we speak. So we saw some nice revenues for that in Q1 and we’ll continue to see it through the balance of this fiscal year. The new orders that we got for $90 million, we’ll see some contribution this year and more contributions in out years as well. Gives us great visibility in 27 and beyond.

Christopher Glynn (Analyst)

Okay, great. Thanks very much. I’ll move it along.

OPERATOR

Thank you. And one moment for our next question. Our next question will come from the line of Larry Solow with CJS Securities. Your line is open. Please go ahead.

Larry Solow (Analyst)

Great. Good afternoon. I guess a couple questions just on the backlog. Composition of the backlog. It sounds like most things are United US focused. Right. You got a couple of big orders in August and then the 90 million on the golden dome on the RF side. I guess that’s mostly us. We know no Middle East this year in your guidance on sales and I’m sure in bookings. But is the majority or vast majority of bookings you expect this year domestic or is there some international stuff in the queue or close in the queue?

AJ Mehra (President and Chief Executive Officer)

So this is A.J. Bear in mind that we do business in 150 countries, so international business we expect to continue. Obviously Middle East is a blip right now and hopefully that turns around and we have domestic orders as well. So it really depends on a quarter by quarter whether it’s domestic or international.

Larry Solow (Analyst)

All right. And I guess the other question I have really is more importantly just in the US. Is there any risk? We’re always looking over our shoulder on the Middle East and Iran. I’m just curious. The U.S., the reconciliation bill, reconciliation 3.0, I guess they call it, I guess after the midterms, that’s supposed to be hopefully hashed out before year end. But is there a funding risk, particularly on Golden Dome and maybe even. Because I don’t think.

I think that that’s a separate funding for them. Right. There’s no actual funding in the traditional appropriations there. So I’m just curious, is that something you guys are watching, particularly on Golden Dome? But just obviously we had a government shutdown last year that impacted stuff for quite a while. So any thoughts on that would be great.

AJ Mehra (President and Chief Executive Officer)

So a lot of this is out of our control, obviously. But keep in mind, with the big, beautiful bill, a lot of the funding for, you know, for DHS as well as the Golden Dome programs was already, you know, was already there. So that’ll continue. And we still waiting for CBP and others for that funding to be awarded. They’ve started the programs, but there’s still a long ways to go. So I think that, you know, really, from the original reconciliation bill, we’re still waiting for orders to be released.

I think that, you know, as far as the future is concerned, we feel, even on the RF business that a lot of the funding is already there. Obviously, everybody looks for future funding, so we’ll see what happens. But, you know, at this point, the programs we’re in, in the near term to short term, we feel pretty good.

Larry Solow (Analyst)

Okay, great. Lastly, just. Just from my take, just summarize it. It sounds like obviously Q1 is a light quarter and top line was fine. Mix was a little bit light. That hurt your margins a little bit. But it doesn’t sound like from an operating standpoint, much has really changed for your outlook this year. The increase in guidance is more because of your share buyback than anything else. Is that kind of fair to say?

Alan Edrick (Chief Financial Officer)

Yeah. Larry, this is Alan. That would be a fair statement at this point in time. Yes.

Larry Solow (Analyst)

Okay. All right, I’m all set then. Thanks. I appreciate it, guys.

OPERATOR

Thank you. And one moment for our next question, which will come from the line of Seth Seifman with JP Morgan. Your line is open. Please go ahead.

Seth Seifman (Analyst)

Thanks very much and good afternoon. I wonder, you gave us some helpful commentary about the revenue in Q2. Just so we’re all kind of properly calibrated in terms of how we get to the year, how do we think about the mix evolving in Q2? I think you mentioned a recovery in services growth and the degree of sequential margin expansion that we might think about.

Alan Edrick (Chief Financial Officer)

Yeah. Seth, this is Alan. So you’re correct. We tried to give some color for modeling purposes for Q2 that we give annual guidance. We do see service revenue accelerating meaningfully in Q2, probably that type of growth doubling, if not more than doubling in Q2 with continued acceleration in the second half of the year as well. So we would anticipate that will contribute nicely to expanding margins throughout the balance of the year.

Seth Seifman (Analyst)

Okay. And then maybe, I guess as you think about capital deployment, we saw some good share repurchase this quarter. Kind of the way that you think about that going forward, still with good cash on the balance sheet, nice conversion this year. Are there interesting things to look at in M and A right now? Is that part of the outlook? Is it kind of more focused on executing this kind of growing backlog that you have? And maybe we’ll see some more share repurchases.

Maybe just some updated thoughts on capital deployment.

AJ Mehra (President and Chief Executive Officer)

So this is A.J. We’re always looking at organic growth. That’s always our, you know, number one priority. And we think there are a lot of opportunities out there. So it’s not that, you know, we absolutely need an acquisition, but we obviously look at acquisitions. We’ve done them in the past. And we need to look at acquisition that’s strategic, that builds on our momentum and then really increases our market penetration or gives us some complementary markets that we’re going after.

And, you know, we’re always looking at all those opportunities. Think about share, you know, repurchases. So there’s no set rule here or there, but we look at all three opportunities, and we still are.

Seth Seifman (Analyst)

Okay, excellent. Thank you very much.

OPERATOR

Thank you. And as a reminder to ask a question, please press star 11 on your telephone. And our next question will come from the line of Jeff Martin with ROTH Capital Partners. Your line is open. Please go ahead.

Jeff Martin (Analyst)

Thanks. Good afternoon. AJ and Alan, wanted to dig into how you’re thinking about future investment in the RF business with the success that you’re having. I know that you built out overseas manufacturing. Do we have significant capacity at this point, or are you going to have to look to expand capacity? And then could you also touch on either R and D or future investment further in RF business?

AJ Mehra (President and Chief Executive Officer)

So, you know, great question, and obviously we want to make sure, and I’ll address the R and D first, that, you know, we start and keep on investing in future products. You obviously want to invest when times are good. And we’re actively looking at opportunities there. In terms of expansion, I think we mentioned before we moved into a new facility, we’ve actually moved into a second new facility. We feel that we have a very robust pipeline that we can meet with the current requirements that we have.

And we can always go into a second shift if needed. And as we actively talk to customers, that’s one of the things we’re able to demonstrate that, yes, we have the ability to get more orders and grow and get them in in a timely manner. And really, if necessary, it’s the kind of business that if you have to add another facility, it will be fairly straightforward for us to do.

Jeff Martin (Analyst)

Great. I think that’s the first time I’ve gotten a great question out of you, A.J. Thank you. That’s all I had.

OPERATOR

Thank you. And I’m showing no further questions at this time. And I would like to hand the conference back over to AJ for any closing remarks.

AJ Mehra (President and Chief Executive Officer)

Once again, thank you all for joining our call. We look forward to speaking with you during our next earnings call following the completion of our fiscal 2027 second quarter. And hopefully all of you have an upcoming great holiday season. Thank you very much.

OPERATOR

This concludes today’s conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.

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OSI Systems (OSIS - Free Report) reported $403.47 million in revenue for the quarter ended September 2026, representing a year-over-year increase of 4.9%. EPS of $1.66 for the same period compares to $1.42 a year ago.

The reported revenue represents a surprise of +1.54% over the Zacks Consensus Estimate of $397.34 million. With the consensus EPS estimate being $1.64, the EPS surprise was +1.22%.

While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.

Here is how OSI performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

Revenues- Healthcare division: $40.74 million compared to the $41.1 million average estimate based on three analysts. The reported number represents a change of 0% year over year.Revenues- Intersegment eliminations: $-19.83 million versus $-17.45 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a 0% change.Revenues- Optoelectronics and Manufacturing division, including intersegment revenues: $109.46 million versus $113.84 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a 0% change.Revenues- Security division: $254.25 million compared to the $258.53 million average estimate based on three analysts. The reported number represents a change of 0% year over year.Non-GAAP basis Operating Income (loss)- Security Division: $34.34 million versus the two-analyst average estimate of $35.95 million.Non-GAAP basis Operating Income (loss)- Corporate/Elimination: $-10.09 million versus $-11 million estimated by two analysts on average.Non-GAAP basis Operating Income (loss)- Healthcare Division: $2.45 million versus the two-analyst average estimate of $0.83 million.Non-GAAP basis Operating Income (loss)- Optoelectronics and Manufacturing Division: $13.08 million versus $14.24 million estimated by two analysts on average.View all Key Company Metrics for OSI here>>>

Shares of OSI have returned +3.2% over the past month versus the Zacks S&P 500 composite's +0.9% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term.

For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.

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Zacks Premium also includes the Zacks Style Scores.

What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.

Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.

The Style Scores are broken down into four categories:

Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.

Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.

Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.

VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +23.82% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

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To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: OSI Systems (OSIS - Free Report) OSI Systems, Inc. designs and manufactures specialized electronic systems and components for security, defense/aerospace, and healthcare end markets. Headquartered in Hawthorne, CA, the company combines equipment sales with services and software tied to its installed base. OSI maintains global R&D, manufacturing, and service capabilities and serves customers in more than 170 countries. The company reports three segments: Security, Optoelectronics & Manufacturing, and Healthcare.

OSIS is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.

It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 17.35; value investors should take notice.

One analyst revised their earnings estimate higher in the last 60 days for fiscal 2027, while the Zacks Consensus Estimate has increased $0.06 to $11.35 per share. OSIS also boasts an average earnings surprise of +2.3%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, OSIS should be on investors' short list.

Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.

The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.

It also includes access to the Zacks Style Scores.

What are the Zacks Style Scores? The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.

Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.

Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.

VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.

#1 (Strong Buy) stocks have produced an unmatched +23.82% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.

Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: OSI Systems (OSIS - Free Report) OSI Systems, Inc. designs and manufactures specialized electronic systems and components for security, defense/aerospace, and healthcare end markets. Headquartered in Hawthorne, CA, the company combines equipment sales with services and software tied to its installed base. OSI maintains global R&D, manufacturing, and service capabilities and serves customers in more than 170 countries. The company reports three segments: Security, Optoelectronics & Manufacturing, and Healthcare.

OSIS is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.

Additionally, the company could be a top pick for growth investors. OSIS has a Growth Style Score of A, forecasting year-over-year earnings growth of 9.7% for the current fiscal year.

One analyst revised their earnings estimate upwards in the last 60 days for fiscal 2027. The Zacks Consensus Estimate has increased $0.06 to $11.35 per share. OSIS boasts an average earnings surprise of +2.3%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, OSIS should be on investors' short list.

, /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of OSI Systems, Inc. ("OSI" or the "Company") (NASDAQ: OSIS).  Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether OSI and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]

On August 20, 2026, OSI reported fiscal fourth-quarter and full-year 2026 financial results, including revenue that fell short of consensus expectations.  OSI attributed the revenue miss to deferred product deliveries stemming from site constraints. 

On this news, OSI's stock price fell $11.36 per share, or 5.21%, to close at $206.73 per share on August 21, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes. 

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

SOURCE Pomerantz LLP

NEW YORK, Sept. 29, 2026 (GLOBE NEWSWIRE) -- Pomerantz LLP is investigating claims on behalf of investors of OSI Systems, Inc. (“OSI” or the “Company”) (NASDAQ: OSIS).  Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether OSI and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]

On August 20, 2026, OSI reported fiscal fourth-quarter and full-year 2026 financial results, including revenue that fell short of consensus expectations.  OSI attributed the revenue miss to deferred product deliveries stemming from site constraints. 

On this news, OSI’s stock price fell $11.36 per share, or 5.21%, to close at $206.73 per share on August 21, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes.  

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

, /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of OSI Systems, Inc. ("OSI" or the "Company") (NASDAQ: OSIS).  Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether OSI and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]

On August 20, 2026, OSI reported fiscal fourth-quarter and full-year 2026 financial results, including revenue that fell short of consensus expectations.  OSI attributed the revenue miss to deferred product deliveries stemming from site constraints. 

On this news, OSI's stock price fell $11.36 per share, or 5.21%, to close at $206.73 per share on August 21, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes.

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

SOURCE Pomerantz LLP

Tidal Investments LLC lifted its position in OSI Systems, Inc. (NASDAQ:OSIS – Free Report) by 504.8% during the 2nd quarter, according to the company in its most recent filing with the SEC. The fund owned 8,316 shares of the technology company’s stock after purchasing an additional 6,941 shares during the quarter. Tidal Investments LLC owned 0.05% of OSI Systems worth $1,819,000 at the end of the most recent reporting period.

Other hedge funds have also made changes to their positions in the company. WINTON GROUP Ltd lifted its holdings in OSI Systems by 541.4% during the 2nd quarter. WINTON GROUP Ltd now owns 7,382 shares of the technology company’s stock valued at $1,614,000 after purchasing an additional 6,231 shares during the last quarter. Engineers Gate Manager LP acquired a new stake in shares of OSI Systems during the second quarter worth approximately $906,000. Integrated Wealth Concepts LLC acquired a new stake in shares of OSI Systems during the second quarter worth approximately $107,000. Nykredit A S bought a new position in shares of OSI Systems in the second quarter valued at approximately $146,000. Finally, VIRGINIA RETIREMENT SYSTEMS ET Al bought a new position in shares of OSI Systems in the second quarter valued at approximately $472,000. Institutional investors and hedge funds own 89.21% of the company’s stock.

Wall Street Analyst Weigh In OSIS has been the topic of several recent analyst reports. Weiss Ratings downgraded OSI Systems from a “buy (b-)” rating to a “hold (c+)” rating in a report on Thursday, July 30th. Roth Capital reaffirmed a “buy” rating and set a $274.00 price target on shares of OSI Systems in a report on Friday, August 21st. Bank of America cut their price objective on OSI Systems from $315.00 to $300.00 and set a “buy” rating for the company in a research report on Monday, July 20th. B. Riley Financial reissued a “buy” rating and issued a $265.00 price objective (down from $320.00) on shares of OSI Systems in a research note on Friday, August 21st. Finally, Oppenheimer decreased their target price on OSI Systems from $320.00 to $300.00 and set an “outperform” rating on the stock in a report on Friday, August 21st. Five equities research analysts have rated the stock with a Buy rating and two have issued a Hold rating to the company. According to MarketBeat.com, OSI Systems presently has an average rating of “Moderate Buy” and an average target price of $281.71.

Check Out Our Latest Stock Report on OSIS OSI Systems Trading Down 0.7% Shares of NASDAQ OSIS opened at $200.35 on Friday. OSI Systems, Inc. has a 1-year low of $186.50 and a 1-year high of $311.72. The company has a 50-day moving average of $214.97 and a two-hundred day moving average of $237.47. The company has a market cap of $3.19 billion, a PE ratio of 22.26, a P/E/G ratio of 1.52 and a beta of 1.20. The company has a current ratio of 3.15, a quick ratio of 2.34 and a debt-to-equity ratio of 1.20.

OSI Systems (NASDAQ:OSIS – Get Free Report) last released its quarterly earnings results on Thursday, August 20th. The technology company reported $3.78 EPS for the quarter, beating the consensus estimate of $3.77 by $0.01. The business had revenue of $484.06 million for the quarter, compared to analysts’ expectations of $529.72 million. OSI Systems had a net margin of 8.66% and a return on equity of 20.33%. OSI Systems’s revenue was up .1% compared to the same quarter last year. During the same period in the prior year, the firm earned $2.84 earnings per share. OSI Systems has set its FY 2027 guidance at 11.130-11.490 EPS. As a group, equities analysts expect that OSI Systems, Inc. will post 11.35 earnings per share for the current fiscal year.

OSI Systems Company Profile (Free Report)

OSI Systems, Inc (NASDAQ: OSIS) is a vertically integrated technology company that designs and manufactures specialized electronic systems for security, healthcare, and optoelectronic applications. The company serves government agencies, transportation authorities, hospitals, medical providers, defense contractors, and commercial customers worldwide.

Through its Rapiscan Systems business, OSI Systems provides security inspection and screening products, including baggage and parcel inspection systems, cargo and vehicle screening equipment, people-screening technologies, radiation detection systems, and related security services.

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, /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of OSI Systems, Inc. ("OSI" or the "Company") (NASDAQ: OSIS).  Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether OSI and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]

On August 20, 2026, OSI reported fiscal fourth-quarter and full-year 2026 financial results, including revenue that fell short of consensus expectations.  OSI attributed the revenue miss to deferred product deliveries stemming from site constraints. 

On this news, OSI's stock price fell $11.36 per share, or 5.21%, to close at $206.73 per share on August 21, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes. 

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

SOURCE Pomerantz LLP

OSI Systems Receives $90 Million in RF Communication Product Orders From U.S. Government Customers OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ: OSIS) today announced that its Security division has received orders totaling approximately $90 million from U.S. Government customers for radio frequency (RF) communication products supporting a range of distinct applications, including advanced Very Low Frequency (VLF) communication systems and critical high frequency transmission products, along with related support services. Leveraging proven production-ready RF based technologies, the awards support ongoing efforts to modernize key communication infrastructure while improving performance, reliability, and lifecycle sustainment.

OSI Systems' President and CEO, Ajay Mehra, commented, “We are seeing good momentum in our RF business and these awards reflect the investments we have made to support that growth through an expanded operational footprint and labor capacity. These awards underscore the value of our differentiated VLF and high frequency transmission technology, the expertise of the RF team, and we appreciate the opportunity to support future upgrades across critical communications infrastructure.”

About OSI Systems

OSI Systems designs and manufactures specialized electronic systems and components for critical applications. The Company operates through three business segments: Security, Optoelectronics and Manufacturing, and Healthcare. Its Security division delivers advanced inspection systems, turnkey screening solutions, and comprehensive support services to protect people and infrastructure. The Optoelectronics and Manufacturing segment serves as a global supplier of high-performance optoelectronic solutions and precision manufacturing services for leading OEMs. The Healthcare segment focuses on patient monitoring, diagnostic cardiology, and related services with the goal of enhancing clinical care and patient outcomes. Serving customers in over 170 countries, OSI Systems strategically positions its sales, service, R&D, and manufacturing capabilities worldwide to provide fast and efficient delivery and support. For more information on OSI Systems or any of its subsidiary companies, visit www.osi-systems.com. News Filter: OSIS-G

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to OSI Systems' current expectations, beliefs, and projections concerning matters that are not historical facts. Forward-looking statements are not guarantees of future performance and involve uncertainties, risks, assumptions, and contingencies, many of which are outside OSI Systems' control and which may cause actual results to differ materially from those described in or implied by any forward-looking statements. Undue reliance should not be placed on forward-looking statements, which are based on currently available information and speak only as of the date on which they are made. OSI Systems assumes no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent events, new information, or otherwise, except to the extent it is required to do so in connection with its ongoing requirements under Federal securities laws. For a further discussion of factors that could cause OSI Systems' future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in OSI Systems' most recently filed Annual Report on Form 10-K and other risks described therein and in documents subsequently filed by OSI Systems from time to time with the Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20260916957557/en/

Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

Click for the complete disclosure

NEW YORK, Sept. 15, 2026 (GLOBE NEWSWIRE) -- Pomerantz LLP is investigating claims on behalf of investors of OSI Systems, Inc. (“OSI” or the “Company”) (NASDAQ: OSIS).  Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether OSI and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]

On August 20, 2026, OSI reported fiscal fourth-quarter and full-year 2026 financial results, including revenue that fell short of consensus expectations.  OSI attributed the revenue miss to deferred product deliveries stemming from site constraints. 

On this news, OSI’s stock price fell $11.36 per share, or 5.21%, to close at $206.73 per share on August 21, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes.  

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

, /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of OSI Systems, Inc. ("OSI" or the "Company") (NASDAQ: OSIS).  Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether OSI and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]

On August 20, 2026, OSI reported fiscal fourth-quarter and full-year 2026 financial results, including revenue that fell short of consensus expectations.  OSI attributed the revenue miss to deferred product deliveries stemming from site constraints. 

On this news, OSI's stock price fell $11.36 per share, or 5.21%, to close at $206.73 per share on August 21, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes. 

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

SOURCE Pomerantz LLP

It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.

The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.

Zacks Premium includes access to the Zacks Style Scores as well.

What are the Zacks Style Scores? Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.

Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.

The Style Scores are broken down into four categories:

Value ScoreValue investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.

Growth ScoreGrowth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.

Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.

VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.

How Style Scores Work with the Zacks Rank The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

#1 (Strong Buy) stocks have produced an unmatched +23.8% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.

But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.

That's where the Style Scores come in.

To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: OSI Systems (OSIS - Free Report) OSI Systems, Inc. designs and manufactures specialized electronic systems and components for security, defense/aerospace, and healthcare end markets. Headquartered in Hawthorne, CA, the company combines equipment sales with services and software tied to its installed base. OSI maintains global R&D, manufacturing, and service capabilities and serves customers in more than 170 countries. The company reports three segments: Security, Optoelectronics & Manufacturing, and Healthcare.

OSIS is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 17.92; value investors should take notice.

Two analysts revised their earnings estimate upwards in the last 60 days for fiscal 2027. The Zacks Consensus Estimate has increased $0.00 to $11.40 per share. OSIS boasts an average earnings surprise of +2.3%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, OSIS should be on investors' short list.

NEW YORK--(BUSINESS WIRE)---- $OSIS #ClassActionLawsuit--The law firm of Kirby McInerney LLP reminds investors of its investigation on behalf of OSI Systems, Inc. (“OSI” or the “Company”) (NASDAQ: OSIS) investors concerning the Company's and/or members of its senior management's possible violation of the federal securities laws or other unlawful business practices.[LEARN MORE ABOUT THE INVESTIGATION]What Happened?On August 20, 2026, OSI reported its fourth quarter 2026 and full-year 2026 financial results, revealing fourth q.

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Zacks Premium also includes the Zacks Style Scores.

What are the Zacks Style Scores? Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.

Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.

Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.

VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

#1 (Strong Buy) stocks have produced an unmatched +23.8% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.

For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: OSI Systems (OSIS - Free Report) OSI Systems, Inc. designs and manufactures specialized electronic systems and components for security, defense/aerospace, and healthcare end markets. Headquartered in Hawthorne, CA, the company combines equipment sales with services and software tied to its installed base. OSI maintains global R&D, manufacturing, and service capabilities and serves customers in more than 170 countries. The company reports three segments: Security, Optoelectronics & Manufacturing, and Healthcare.

OSIS is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

Additionally, the company could be a top pick for growth investors. OSIS has a Growth Style Score of A, forecasting year-over-year earnings growth of 10.1% for the current fiscal year.

Two analysts revised their earnings estimate upwards in the last 60 days for fiscal 2027. The Zacks Consensus Estimate has increased $0.00 to $11.40 per share. OSIS boasts an average earnings surprise of +2.3%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, OSIS should be on investors' short list.

, /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of OSI Systems, Inc. ("OSI" or the "Company") (NASDAQ: OSIS).  Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether OSI and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]

On August 20, 2026, OSI reported fiscal fourth-quarter and full-year 2026 financial results, including revenue that fell short of consensus expectations.  OSI attributed the revenue miss to deferred product deliveries stemming from site constraints. 

On this news, OSI's stock price fell $11.36 per share, or 5.21%, to close at $206.73 per share on August 21, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes. 

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

SOURCE Pomerantz LLP

OSI Systems posted mixed Q4 results, with revenues down 4% y/y but notable margin expansion and strong cash flow generation. Despite revenue softness, OSIS improved gross margin by 138bps and operating margin by 200bps, driven by healthcare division profitability gains. Backlog increased to $1.9B, with management emphasizing timing issues over structural demand weakness and guiding for 5%-8.1% y/y revenue growth in FY27.

OSI Systems Inc. (NASDAQ:OSIS) on Thursday reported mixed fourth-quarter financial results and issued weak FY27 sales guidance.

X-ray luggage and parcel examiner OSI Systems (OSIS -9.08%) stock tumbled 9.9% through 11:40 a.m. ET Friday morning after reporting mixed earnings on Thursday.

Heading into the company's Q4 report, analysts were looking for $3.77 per share in non-GAAP profit on sales of $529.7 million, as TheFly.com reports. Unfortunately, while OSI beat earnings with $3.78 per share in profit, its sales fell far short of expectations, coming in at just $484.1 million.

Image source: Getty Images.

OSI Systems Q4 earnings That's the good news -- now here's the bad. OSI Systems' Q4 sales declined 4% year over year, and the $3.78 per share it earned were only non-GAAP profits; actual earnings calculated under generally accepted accounting principles (GAAP) were only $3.27 per share, and up only 8% year over year.

For the full year, OSI reported 4% sales growth to $1.8 billion, and only 3% GAAP earnings growth -- $8.95 per share.

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198.29

What's next for OSI Systems stock At first glance, these aren't great numbers. OSI stock trades close to $200 per share right now, and its $8.95 per share in full-year earnings works out to a 22x price-to-earnings ratio -- a bit expensive for a company growing earnings at only 3%!

The good news is that free cash flow at OSI looks quite a bit better. In 2026, FCF totaled $245.3 million, resulting in a price-to-free cash flow ratio of just 13.3x. The better news is that in 2027, management forecasts accelerated growth, with sales expected to rise as much as 8% and non-GAAP earnings as much as 11%.

That's still not fast enough growth to justify the valuation in my view, but it's closer to the mark. If OSI stock continues to sink in the wake of earnings, it may become cheap enough to buy.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Key Takeaways OSI Systems beat Q4 earnings estimates as margins rose, while revenues fell 4.1% on delays.About $50M of Security deliveries shifted past year-end, while backlog hit a record $1.90B.OSI Systems expects fiscal 2027 revenues to grow 5.0%-8.1%, with a stronger second half. OSI Systems (OSIS - Free Report) reported fourth-quarter fiscal 2026 adjusted earnings of $3.78 per share, up 16.7% year over year and surpassing the Zacks Consensus Estimate by 0.53%.

Revenues fell 4.1% to $484.06 million and missed the consensus mark by 8.38%. About $50 million of planned Security deliveries shifted beyond fiscal year-end because of Middle East conflict-related delays and site access constraints. Backlog still ended at a record $1.90 billion.

OSIS Security Faces Middle East Timing PressureSecurity revenues declined 7.4% year over year to $339.73 million. The decrease reflected delayed Middle East deliveries and a difficult comparison with Mexico program revenues. Management said the fiscal fourth quarter included about a $20 million year-over-year revenue headwind from the Mexico security contracts.

The underlying service picture was firmer. Excluding prior-year installation revenues tied to Mexico contracts, Security service revenues increased 9% year over year. Management stressed that the delayed Middle East deliveries were deferred rather than cancelled, while related orders remained in backlog with revised schedules.

OSI Systems Adds U.S. Security AwardsSince the end of fiscal 2026 on June 30, 2026, U.S. Customs and Border Protection (CBP) awarded OSIS two five-year IDIQ contracts. One carries a ceiling of about $200 million for relocatable passenger vehicle inspection systems, while the other has an approximately $85 million ceiling for van-mounted mobile X-ray inspection systems. OSIS has already received delivery orders, including a roughly $21 million task order.

Radio-frequency programs also remain an important growth avenue. During fiscal 2026, OSIS secured an undefinitized contract action with a not-to-exceed value of about $235 million for a homeland defense over-the-horizon radar transmit subsystem. Management said customer engagement across the RF portfolio is at its highest level to date.

OSIS Optoelectronics & Healthcare Add GrowthOptoelectronics and Manufacturing revenues rose 4.6% year over year to $117.81 million. Adjusted operating margin improved to 14.7% from 13.6%, aided by scale benefits and a more favorable revenue mix. Management expects the segment to pair revenue growth with further operating-margin expansion in fiscal 2027.

Healthcare revenues increased 4.8% year over year to $44.75 million. Its adjusted operating margin climbed to 10.0% from 0.9% a year earlier, reflecting operating leverage and improvements implemented during the year. The division continues to focus on installed-base expansion and next-generation patient-monitoring products.

OSIS Expands Profitability on Favorable MixGross profit totaled $167.95 million compared with $168.24 million in the prior-year quarter. Gross margin expanded 140 basis points year over year to 34.7%, as a more favorable product sales mix more than offset the prior-year benefit from higher Mexico-related installation service revenues.

Operating expenses declined 1.2% year over year to $94.07 million. Selling, general and administrative expenses fell 6.6% year over year to $69.75 million, representing 14.4% of revenues, down from 14.8% a year ago. R&D expenses increased to $19.50 million, or 4.0% of revenues, from $18.84 million, or 3.7%, as OSIS continued investing in innovation.

Non-GAAP operating margin reached 17.7%, up 200 basis points from 15.7% in the prior-year quarter. Security, Optoelectronics and Manufacturing, and Healthcare all posted year-over-year adjusted operating margin improvement, with margins rising 40, 110 and 910 basis points, respectively.

OSIS' Balance Sheet & Cash FlowAs of June 30, 2026, cash and cash equivalents were $359.83 million, up from $345.24 million as of March 31, 2026.

As of June 30, 2026, the company had about $998.52 million of long-term debt up from $463.50 million a year earlier.

Net cash provided by operating activities increased to $182.11 million in the fourth quarter of fiscal 2026 from $0.56 million in the year-ago period.a

OSI Systems repurchased 564,880 shares for $123.6 million during the quarter.

OSI Systems Sets Fiscal 2027 Growth OutlookFor fiscal 2027, OSIS expects revenues to be in the range of $1.875 billion to $1.930 billion, implying growth of 5.0% to 8.1%. Adjusted earnings are projected at $11.13 to $11.49 per share, representing growth of 7.5% to 11.0%.

Management expects growth to be strongest in the second half, reflecting conservative assumptions for Middle East deliveries and limited near-term contributions from newer U.S. security awards. OSIS expects strong double-digit growth in service revenues, while larger contributions from recent CBP programs are anticipated in fiscal 2028 and beyond.

OSIS Zacks Rank & Other Stocks to Consider

OSI Systems NASDAQ: OSIS reported record fiscal 2026 revenue, earnings and operating cash flow, while fourth-quarter sales fell short of expectations after conflict-related delays in the Middle East pushed roughly $50 million of planned Security division deliveries beyond the company’s June 30 fiscal year-end.

Chief Financial Officer Alan Edrick said the delayed revenue represented deferred deliveries rather than lost orders. The affected projects remain in backlog and are expected to be completed on a later schedule, he said.

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For the fiscal year ended June 30, OSI reported record revenue of $1.79 billion, up 4% from the prior year, and record non-GAAP earnings per share of $10.35, up 11%. Fourth-quarter revenue was $484 million, down about 4% year over year, while non-GAAP EPS rose 17% to a record $3.78.

Backlog reaches record level The company ended fiscal 2026 with approximately $1.9 billion in backlog, its highest level to date. Edrick said full-year book-to-bill was “a little bit north of one,” while fourth-quarter book-to-bill was just below one. He described bookings as particularly strong in Optoelectronics and solid in Security and Healthcare.

President and CEO Ajay Mehra said demand remained strong across the company’s portfolio despite near-term disruptions in the Middle East. He said the Security division faced delivery headwinds during the quarter, while Optoelectronics posted broad-based growth and Healthcare improved.

“The security-related deliveries that were pushed out remain in backlog and are expected to be completed in future quarters,” Mehra said.

Management said the delayed deliveries were primarily to customers in the Middle East. Edrick said that, after the third-quarter report, the company had expected a significant portion of those orders to be delivered in the fourth quarter. OSI now expects a substantial portion, though not all, to be delivered in the second half of fiscal 2027.

Security awards and defense opportunities Since the fiscal year-end, U.S. Customs and Border Protection has awarded OSI two five-year indefinite-delivery, indefinite-quantity contracts. One has a ceiling of approximately $200 million for relocatable Rapiscan passenger vehicle inspection systems, while the other has a ceiling of roughly $85 million for van-mounted mobile X-ray inspection systems.

The company has received delivery orders under both contracts, including a task order valued at about $21 million. Mehra said OSI is the sole awardee under both IDIQ contracts. Management expects a portion of the orders already in hand to contribute to fiscal 2027 revenue, but said the larger contribution is expected in fiscal 2028 and beyond.

Edrick noted that the ceiling values of the IDIQ contracts do not immediately enter backlog. Instead, firm delivery or task orders are added to backlog as they are received.

In the company’s radio-frequency business, OSI previously received an indefinitized contract action with a not-to-exceed value of approximately $235 million for production and integration of homeland defense over-the-horizon radar transmit subsystems. Edrick said roughly 80% of that award entered backlog in the fiscal third quarter and will be delivered over the next couple of years.

Mehra said OSI also participates in the SHIELD IDIQ vehicle supporting Golden Dome-related initiatives. He described customer engagement in the RF portfolio as the highest the company has seen for that product line and said the business is expected to experience strong growth into fiscal 2028.

Margins, cash flow and shareholder returns Fourth-quarter non-GAAP operating margin expanded 200 basis points to 17.7%. Security adjusted operating margin increased to 20.8% from 20.4%, while Optoelectronics margin rose to 14.7% from 13.6%. Healthcare adjusted operating margin increased to 10% from 1% in the prior-year quarter, supported by higher revenue and operating leverage.

Optoelectronics and Manufacturing generated 9% full-year revenue growth to $451 million, according to Mehra. Edrick said the business has been attracting a stronger customer profile and that management intends to pair fiscal 2027 revenue growth with further operating-margin expansion, though quarterly results may vary with product and customer mix.

Service revenue rose 13% for the full year to $441 million. While total service revenue was relatively flat in the fourth quarter, Edrick said Security service revenue increased 9% year over year excluding installation activity tied to Mexico contracts in the prior-year period. OSI expects strong double-digit service revenue growth in fiscal 2027.

Operating cash flow reached a record $182 million in the fourth quarter and $276 million for the year, helped by collections across the business. The company collected $159 million from its largest Mexico customer during the fourth quarter, reducing that customer’s accounts receivable balance to $190 million from $345 million at the end of the third quarter.

OSI ended the year with $360 million in cash, compared with $106 million a year earlier, and no borrowings under its lines of credit. During fiscal 2026, the company repurchased and retired 1.1 million shares. In the fourth quarter alone, it repurchased about 565,000 shares for $123.6 million, or an average of roughly $219 per share. The board authorized an additional 1 million shares for repurchase, leaving about 1.1 million shares available under the program.

Fiscal 2027 outlook OSI forecast fiscal 2027 revenue of $1.875 billion to $1.93 billion, representing growth of 5% to 8.1%, and non-GAAP diluted EPS of $11.13 to $11.49, representing growth of 7.5% to 11%.

Management said the outlook incorporates a conservative approach to Middle East deliveries and future orders amid the conflict. It also includes only a portion of the CBP delivery orders already received rather than the full ceiling value of the agency’s IDIQ awards.

The company expects fiscal 2027 growth to be strongest in the second half. Edrick also said OSI expects strong operating and free cash flow during the year and anticipates free cash flow could exceed 100% of net income.

About OSI Systems (NASDAQ:OSIS)OSI Systems, Inc NASDAQ: OSIS is a publicly traded technology company founded in 1987 and headquartered in Hawthorne, California. The company designs, develops and manufactures advanced security and inspection systems, optoelectronic devices and medical imaging equipment. Over its history, OSI Systems has grown its product offerings through internal research and development as well as strategic acquisitions, expanding its capabilities in mission-critical sensing and inspection technologies.

OSI Systems operates three primary business segments.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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Should You Invest $1,000 in OSI Systems Right Now?Before you consider OSI Systems, you'll want to hear this.

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For the quarter ended June 2026, OSI Systems (OSIS - Free Report) reported revenue of $484.06 million, down 4.1% over the same period last year. EPS came in at $3.78, compared to $3.24 in the year-ago quarter.

The reported revenue compares to the Zacks Consensus Estimate of $528.34 million, representing a surprise of -8.38%. The company delivered an EPS surprise of +0.53%, with the consensus EPS estimate being $3.76.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.

Here is how OSI performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

Revenues- Healthcare division: $44.75 million versus $43.6 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +4.8% change.Revenues- Intersegment eliminations: $-18.23 million versus the three-analyst average estimate of $-19.14 million. The reported number represents a year-over-year change of +5.2%.Revenues- Optoelectronics and Manufacturing division, including intersegment revenues: $117.81 million versus the three-analyst average estimate of $117.33 million. The reported number represents a year-over-year change of +4.6%.Revenues- Security division: $339.73 million compared to the $388 million average estimate based on three analysts. The reported number represents a change of -7.4% year over year.Non-GAAP basis Operating Income (loss)- Security Division: $70.65 million compared to the $81.4 million average estimate based on two analysts.Non-GAAP basis Operating Income (loss)- Corporate/Elimination: $-6.9 million versus $-10.5 million estimated by two analysts on average.Non-GAAP basis Operating Income (loss)- Healthcare Division: $4.48 million compared to the $2.18 million average estimate based on two analysts.Non-GAAP basis Operating Income (loss)- Optoelectronics and Manufacturing Division: $17.27 million compared to the $16.18 million average estimate based on two analysts.View all Key Company Metrics for OSI here>>>

Shares of OSI have returned +5.3% over the past month versus the Zacks S&P 500 composite's +3.5% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

HAWTHORNE, Calif.--(BUSINESS WIRE)--OSI Systems, Inc. (NASDAQ: OSIS) today announced that its Board of Directors has approved an increase to the Company’s existing stock repurchase authorization.

The Board has authorized an additional 1,000,000 shares for repurchase under the Company’s stock repurchase program, increasing the total remaining authorization to 1,078,731. The expanded authorization reflects the Company’s continued confidence in its long-term strategy and strong free cash flow generation.

During the quarter ended June 30, 2026, the Company repurchased 564,880 shares of its common stock.

“We continue to execute on our capital allocation priorities by returning capital to shareholders through share repurchases,” said Alan Edrick, Executive Vice President and Chief Financial Officer. “The increase in our share repurchase authorization underscores our confidence in the strength of our business and our ability to generate robust cash flow, while maintaining flexibility to invest in growth opportunities.”

Purchases may be made from time to time in the open market or in privately negotiated transactions and block trades, in accordance with federal securities laws, including Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. This program does not have an expiration date. The share repurchase program may be modified, terminated or expanded by the Company at any time without prior notice. There is no guarantee as to the exact number of shares, if any, that will be purchased by the Company. The amount and timing of any purchases will depend on a number of factors, including price, trading volume, general market conditions, legal requirements, and other factors.

About OSI Systems

OSI Systems designs and manufactures specialized electronic systems and components for critical applications. The Company operates through three business segments: Security, Optoelectronics and Manufacturing, and Healthcare. Its Security division delivers advanced inspection systems, turnkey screening solutions, and comprehensive support services to protect people and infrastructure. The Optoelectronics and Manufacturing segment serves as a global supplier of high-performance optoelectronic solutions and precision manufacturing services for leading OEMs. The Healthcare segment focuses on patient monitoring, diagnostic cardiology, and related services with the goal of enhancing clinical care and patient outcomes. Serving customers in over 170 countries, OSI Systems strategically positions its sales, service, R&D, and manufacturing capabilities worldwide to provide fast and efficient delivery and support. For more information on OSI Systems or any of its subsidiary companies, visit www.osi-systems.com. News Filter: OSIS-G

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to OSI Systems’ current expectations, beliefs, and projections concerning matters that are not historical facts. Forward-looking statements are not guarantees of future performance and involve uncertainties, risks, assumptions, and contingencies, many of which are outside OSI Systems’ control and which may cause actual results to differ materially from those described in or implied by any forward-looking statements. Undue reliance should not be placed on forward-looking statements, which are based on currently available information and speak only as of the date on which they are made. OSI Systems assumes no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent events, new information, or otherwise, except to the extent it is required to do so in connection with its ongoing requirements under Federal securities laws. For a further discussion of factors that could cause OSI Systems’ future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in OSI Systems’ most recently filed Annual Report on Form 10-K and other risks described therein and in documents subsequently filed by OSI Systems from time to time with the Securities and Exchange Commission.

More News From OSI Systems, Inc.

OSI Systems (NASDAQ:OSIS – Get Free Report) and Photon Control (OTCMKTS:POCEF – Get Free Report) are both technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Profitability This table compares OSI Systems and Photon Control’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets OSI Systems 8.42% 18.84% 7.13% Photon Control N/A N/A N/A Analyst Recommendations This is a summary of current recommendations and price targets for OSI Systems and Photon Control, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score OSI Systems 0 2 5 0 2.71 Photon Control 0 0 0 0 0.00 OSI Systems currently has a consensus target price of $291.86, suggesting a potential upside of 33.43%. Given OSI Systems’ stronger consensus rating and higher possible upside, analysts plainly believe OSI Systems is more favorable than Photon Control. Institutional and Insider Ownership 89.2% of OSI Systems shares are owned by institutional investors. 4.3% of OSI Systems shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings This table compares OSI Systems and Photon Control”s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio OSI Systems $1.81 billion 2.00 $149.64 million $8.76 24.97 Photon Control N/A N/A N/A N/A N/A OSI Systems has higher revenue and earnings than Photon Control.

Summary OSI Systems beats Photon Control on 9 of the 9 factors compared between the two stocks.

About OSI Systems (Get Free Report)

OSI Systems, Inc. designs and manufactures electronic systems and components. It operates in three segments: Security, Healthcare, and Optoelectronics and Manufacturing. The Security segment offers baggage and parcel inspection, cargo and vehicle inspection, hold baggage and people screening, radiation monitoring, explosive and narcotics trace detection systems, and optical inspection systems under the Rapiscan name. It also provides site design, installation, training, and technical support services; and turnkey security screening solutions under the S2 name. The Healthcare segment offers patient monitoring, cardiology and remote monitoring, and connected care systems and accessories under the Spacelabs name for use in critical care, emergency, and perioperative areas within hospitals, physicians' offices, medical clinics, and ambulatory surgery centers. The Optoelectronics and Manufacturing segment provides optoelectronic devices under the OSI Optoelectronics, OSI LaserDiode, OSI Laserscan, and Advanced Photonix names for the aerospace and defense, avionics, medical imaging and diagnostics, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction, and homeland security markets. It also offers electronics manufacturing services to original equipment manufacturers and end users for medical, automotive, defense, aerospace, industrial, and consumer applications under the OSI Electronics, APlus Products, Altaflex, and PFC Flexible Circuits names; LCD displays for medical, industrial, and consumer electronics applications; and flex circuits for OEM customers. This segment offers laser-based remote sensing devices to detect and classify vehicles in toll and traffic management systems under the OSI Laserscan and Autosense names; and solid-state laser products for aerospace, defense, telecommunication, and medical applications under the OSI LaserDiode name. The company was incorporated in 1987 and is headquartered in Hawthorne, California.

About Photon Control (Get Free Report)

Photon Control Inc. designs, manufactures, and distributes a range of optical sensors and systems to measure temperature and position. The company offers temperature probes, such as photon fiber optic temperature sensor probes, single channel converters, and multichannel temperature converters; GaAs fiber optic temperature sensors; and multipoint temperature sensors. It also provides fiber optic absolute encoders; and fiber optic incremental encoders, as well as fiber optic signaling devices. In addition, the company offers custom design, installation, training, and support services. It serves semiconductor, flat panel display, medical, energy, and research and development industries. The company was formerly known as Coldswitch Technologies Inc. and changed its name to Photon Control Inc. in 2002. Photon Control Inc. was incorporated in 1988 and is headquartered in Richmond, Canada.

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