OSI SYSTEMS INC (OSIS): Results of Operations and Financial Condition
OSI SYSTEMS INC (OSIS) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 OSI SYSTEMS REPORTS FISCAL 2026 FOURTH QUARTER AND FISCAL YEAR FINANCIAL RESULTS · Record Fiscal Year 2026 Revenues of $1.79 billion · Q4 Earnings per Diluted Share o GAAP EPS of $3.27 o Record Non-GAAP EPS of $3.78 (17% growth year-over-year) · Fiscal Year 2026 Earn
How this was made
The 30-second read
Why it matters
Record earnings and a clear growth outlook suggest a bullish catalyst, while the disclosed share repurchase underscores capital return policy.
Market read
First‑report earnings and guidance for a mid‑cap defense/electronics firm; likely to move the stock and influence sector sentiment.
What to watch
Cash burn from debt refinancing and reduced bank lines could constrain future buybacks if earnings miss.
OSI Systems reports record fiscal 2026 revenues of $1.79 billion, record fourth-quarter non-GAAP EPS of $3.78, record fiscal-year operating cash flow of $276 million, and fiscal 2027 revenue and non-GAAP EPS guidance.
Fiscal-year revenue, GAAP EPS, non-GAAP EPS and operating cash flow increased year over year, while fourth-quarter revenue declined 4% amid Middle East delivery disruptions. Fourth-quarter profitability and cash generation were strong, backlog reached approximately $1.9 billion, and fiscal 2027 guidance calls for revenue and non-GAAP EPS growth.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Fourth-quarter total net revenuesGAAP | $484,058 thousand | – | -4% |
| Fiscal-year total net revenuesGAAP | $1,785,984 thousand | – | 4% |
| Fourth-quarter product revenuesGAAP | $373,240 thousand | – | – |
| Fourth-quarter service revenuesGAAP | $110,818 thousand | – | – |
| Fiscal-year product revenuesGAAP | $1,344,733 thousand | – | – |
| Fiscal-year service revenuesGAAP | $441,251 thousand | – | – |
| Fourth-quarter gross profitGAAP | $167,954 thousand | – | – |
| Fiscal-year gross profitGAAP | $593,092 thousand | – | – |
| Fourth-quarter income from operationsGAAP | $73,888 thousand | – | – |
| Fourth-quarter operating marginGAAP | 15.3% | – | – |
| Fourth-quarter non-GAAP operating incomenon-GAAP | $85,500 thousand | – | – |
| Fourth-quarter non-GAAP operating marginnon-GAAP | 17.7% | – | – |
| Fiscal-year income from operationsGAAP | $218,970 thousand | – | – |
| Fiscal-year operating marginGAAP | 12.3% | – | – |
| Fiscal-year non-GAAP operating incomenon-GAAP | $253,312 thousand | – | – |
| Fiscal-year non-GAAP operating marginnon-GAAP | 14.2% | – | – |
| Fourth-quarter net incomeGAAP | $55,240 thousand | – | – |
| Fiscal-year net incomeGAAP | $154,711 thousand | – | – |
| Fourth-quarter diluted earnings per shareGAAP | $3.27 | – | 8% |
| Fourth-quarter diluted earnings per sharenon-GAAP | $3.78 | – | 17% |
| Fiscal-year diluted earnings per shareGAAP | $8.95 | – | 3% |
| Fiscal-year diluted earnings per sharenon-GAAP | $10.35 | – | 11% |
| Fourth-quarter weighted average shares outstanding – dilutedGAAP | 16,910 thousand | – | – |
| Fiscal-year weighted average shares outstanding – dilutedGAAP | 17,280 thousand | – | – |
| Fourth-quarter cash flow provided by operating activitiesGAAP | $182,110 thousand | – | – |
| Fiscal-year cash flow provided by operating activitiesGAAP | $275,904 thousand | – | – |
| Fourth-quarter capital expendituresGAAP | $9,298 thousand | – | – |
| Fiscal-year capital expendituresGAAP | $30,570 thousand | – | – |
| Backlog as of June 30, 2026other | approximately $1.9 billion | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Security, fourth quarterRevenues were impacted by disruptions from the Middle East conflicts that shifted the timing of certain planned deliveries; the company reported healthy bookings, substantial backlog and a significant opportunity pipeline. | $339,733 thousand | – | – |
| Optoelectronics & Manufacturing, fourth quarterBroad-based demand across several key end markets, including aerospace, defense, healthcare, technology and industrial customers. | $117,806 thousand | – | up about 5% year-over-year |
| Healthcare, fourth quarterOperational improvements implemented throughout the year; the company is focused on expanding its installed base, clinical solutions and product development. | $44,751 thousand | – | up approximately 5% |
| Security, fiscal yearThe division ended the year with substantial backlog, a significant opportunity pipeline and recent program wins. | $1,247,949 thousand | – | – |
| Optoelectronics & Manufacturing, fiscal yearThe company cited demand across several key end markets and its highly engineered products, precision manufacturing capabilities and global operational reach. | $450,817 thousand | – | – |
| Healthcare, fiscal yearThe company cited operational improvements and initiatives to expand the installed base and advance product development. | $162,729 thousand | – | – |
Fiscal Year 2027 outlook
- Revenue$1.875 billion - $1.930 billion; YoY Growth Rate 5.0% - 8.1%
- NoteNon-GAAP Diluted Earnings Per Share: $11.13 - $11.49
- NoteNon-GAAP Diluted Earnings Per Share YoY Growth Rate: 7.5% - 11.0%
- NoteThe company provides fiscal 2027 diluted EPS guidance on a non-GAAP basis only and does not provide a forward-looking reconciliation to GAAP diluted EPS.
Capital returns
- The company repurchased 564,880 shares during the fiscal 2026 fourth quarter for an aggregate cash amount of $123.6 million.
- The company continued to return capital to shareholders through stock repurchases during fiscal 2026.
What drove it
- Fiscal-year revenues increased 4% to $1,785,984 thousand.
- Fourth-quarter GAAP diluted EPS increased 8% to $3.27 and non-GAAP diluted EPS increased 17% to $3.78.
- The Security division reported strong profitability, outstanding cash generation and healthy bookings.
- Optoelectronics & Manufacturing fourth-quarter revenue rose about 5% year over year on broad-based demand.
- Healthcare fourth-quarter revenue increased approximately 5%, while non-GAAP operating margin was 10.0% compared with 0.9% in the prior-year quarter.
- Backlog was approximately $1.9 billion as of June 30, 2026, compared with $1.8 billion a year ago.
Concerns
- Fourth-quarter total net revenues declined 4% to $484,058 thousand.
- The company cited Middle East conflicts as causing disruptions and shifting the timing of certain planned Security deliveries.
- Fiscal-year Security GAAP operating margin was 16.1%, compared with 17.1% in fiscal 2025.
- Fiscal-year Healthcare revenue was $162,729 thousand versus $168,362 thousand in fiscal 2025, and GAAP operating income was negative $33 thousand versus $2,462 thousand.
- Fiscal-year impairment, restructuring and other charges, net were $16,591 thousand, compared with $5,335 thousand in fiscal 2025.
- Long-term debt was $998,518 thousand as of June 30, 2026, compared with $463,504 thousand a year earlier.
What to watch
- The timing of Security deliveries affected by Middle East conflicts and conversion of delayed backlog into revenue.
- Security bookings, backlog and progress on recent program wins.
- Sustainability of Healthcare operational improvements, including its 10.0% fourth-quarter non-GAAP operating margin.
- Execution against fiscal 2027 revenue guidance of $1.875 billion - $1.930 billion and non-GAAP diluted EPS guidance of $11.13 - $11.49.
- Cash generation, debt management after the fiscal 2026 refinancing and expanded long-term debt, and ongoing share repurchases.
Balance sheet and cash flow
- Cash and cash equivalents were $359,832 thousand as of June 30, 2026, compared with $106,405 thousand as of June 30, 2025.
- Accounts receivable, net were $764,626 thousand as of June 30, 2026, compared with $837,743 thousand as of June 30, 2025.
- Inventories were $415,562 thousand as of June 30, 2026, compared with $407,174 thousand as of June 30, 2025.
- Bank lines of credit were $0 as of June 30, 2026, compared with $178,000 thousand as of June 30, 2025.
- Current portion of long-term debt was $2,531 thousand and long-term debt was $998,518 thousand as of June 30, 2026, compared with $8,130 thousand and $463,504 thousand, respectively, as of June 30, 2025.
- During fiscal 2026, the company refinanced and expanded its long-term debt, extended maturities, and enhanced financial flexibility to fund growth initiatives.
- Fourth-quarter cash flow provided by operating activities was $182,110 thousand, compared with $561 thousand in the prior-year quarter.
- Fiscal-year cash flow provided by operating activities was $275,904 thousand, compared with $97,592 thousand in fiscal 2025.
Analysis
OSI Systems closed fiscal 2026 with revenue of $1,785,984 thousand, up 4% from fiscal 2025, while GAAP diluted EPS increased 3% to $8.95 and non-GAAP diluted EPS increased 11% to $10.35. Fourth-quarter revenue declined 4% to $484,058 thousand, but GAAP diluted EPS rose 8% to $3.27 and non-GAAP diluted EPS rose 17% to $3.78. The company attributed the quarterly revenue pressure to Middle East conflicts that shifted planned Security deliveries, while stating that the delayed orders remain in backlog with updated delivery schedules.
Segment performance was uneven. Security fourth-quarter revenue was $339,733 thousand and the company cited strong profitability, cash generation and healthy bookings, but disruptions affected delivery timing. Optoelectronics & Manufacturing generated $117,806 thousand of fourth-quarter revenue, up about 5% year over year on broad-based demand across key end markets. Healthcare generated $44,751 thousand, up approximately 5%, and posted 10.0% non-GAAP operating margin versus 0.9% in the prior-year quarter. That quarterly Healthcare margin improvement contrasts with fiscal-year Healthcare GAAP operating income of negative $33 thousand.
Profitability improved in the fourth quarter despite the revenue decline. GAAP operating margin was 15.3%, compared with 14.5% a year earlier, and non-GAAP operating margin was 17.7%, compared with 15.7%. For the fiscal year, GAAP operating margin declined to 12.3% from 12.7%, while non-GAAP operating margin increased to 14.2% from 14.1%. Fiscal-year impairment, restructuring and other charges increased to $16,591 thousand from $5,335 thousand, which was a meaningful item in the GAAP-to-non-GAAP reconciliation.
Cash flow was the central financial strength of the release. Fourth-quarter operating cash flow was a record $182,110 thousand versus $561 thousand a year earlier, and fiscal-year operating cash flow reached a record $275,904 thousand versus $97,592 thousand. Cash and cash equivalents increased to $359,832 thousand from $106,405 thousand. The company repurchased 564,880 shares for $123.6 million during the fourth quarter, refinanced and expanded long-term debt, and reduced bank lines of credit to zero, while long-term debt rose to $998,518 thousand from $463,504 thousand.
Fiscal 2027 guidance calls for revenue of $1.875 billion to $1.930 billion and non-GAAP diluted EPS of $11.13 to $11.49. The guide is underpinned by approximately $1.9 billion of backlog, compared with $1.8 billion a year ago, alongside a significant opportunity pipeline and recent program wins. The key operating issue is whether delayed Security deliveries convert on the updated schedule while the company sustains Optoelectronics & Manufacturing demand, Healthcare margin progress and elevated cash generation.
Management, verbatim
Fiscal 2026 was a strong year for the Company, capped by record fourth quarter non-GAAP earnings per share and record operating cash flow, despite the impact of revenue headwinds from the Middle East conflicts which shifted the timing of certain planned deliveries.
Ajay Mehra, President and Chief Executive Officer
While revenues were impacted by disruptions from the Middle East conflicts, underlying demand for our products and services remain encouraging. These delays do not reflect order cancellations and remain in our backlog with updated delivery schedules.
Ajay Mehra, President and Chief Executive Officer
The Healthcare division delivered an improved fourth quarter, with revenues up approximately 5% and an adjusted operating margin of 10% compared with 1% in the prior-year quarter, demonstrating the impact of operational improvements implemented throughout the year.
Ajay Mehra, President and Chief Executive Officer
Not in the filing
stated, not guessed- Previous-quarter outlook was not provided, so no comparison of actual results with prior guidance is available.
- Free cash flow was not reported.
- GAAP gross margin and non-GAAP gross margin were not reported.
- Fiscal 2027 guidance for gross margin, operating expenses, tax rate, operating cash flow, capital expenditures, backlog and GAAP diluted EPS was not reported.
- Dividend information was not reported.
- Quarter-over-quarter comparisons were not reported.
- Forward-looking GAAP diluted EPS guidance and a reconciliation of fiscal 2027 non-GAAP diluted EPS guidance to GAAP diluted EPS were not provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The filing is an SEC Form 8‑K announcing OSI Systems' FY2026 financial results and FY2027 outlook.
Ticker impact
OSI Systems reported FY2026 results with record revenue $1.79B, GAAP EPS $8.95 and issued FY2027 guidance of $1.875‑$1.93B revenue and $11.13‑$11.49 non‑GAAP EPS.
Potential upside of 5‑10% in the near term as investors price in growth and cash return.
First‑report earnings with record metrics and forward guidance for a mid‑cap listed company typically drive immediate market reaction.
Market effects
Positive for defense and security equipment sector as OSIS signals robust demand despite Middle East conflict delays.
North American defense and optoelectronics markets may see modest uplift.
Limited to investors tracking US-listed industrial and aerospace suppliers.
Counterpoint
Guidance may already be priced in; any slowdown in backlog or geopolitical escalation could pressure the stock.
Key entities
- ExecutiveAjay Mehra
President and CEO of OSI Systems, provided commentary on results and outlook.
