OSI Systems Reports Fiscal 2026 Second Quarter Financial Results

  • Record Q2 Revenues of $464 Million (11% year-over-year growth)
  • Q2 Earnings per Diluted Share

    • GAAP EPS of $2.22
    • Record Non-GAAP EPS of $2.58
  • Q2 Operating Cash Flow of $62 Million
  • Company Increases Fiscal 2026 Non-GAAP EPS Guidance

HAWTHORNE, Calif.–(BUSINESS WIRE)–OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ: OSIS) today announced its financial results for the second quarter of fiscal 2026.

Ajay Mehra, OSI Systems’ President and Chief Executive Officer, stated, “We are pleased to report record second quarter revenues and non-GAAP earnings per share, driven by strong year-over-year growth from our industry leading Security and Optoelectronics and Manufacturing divisions. Looking ahead, we expect our significant backlog, opportunity pipeline, and anticipated strong bookings in the second half of the fiscal year to position us well for continued growth, as we capitalize on increasing industry demand and pursue strategic initiatives across key markets.”

Financial Summary

Three Months Ended December 31, Six Months Ended December 31,
(Dollars in thousands, except per-share amounts)

2024

2025

% Growth

2024

2025

% Growth

 
Revenues

$

419,820

$

464,057

11%

$

763,827

$

848,680

11%

 
Diluted earnings per share – GAAP

$

2.22

$

2.22

0%

$

3.27

$

3.39

4%

Diluted earnings per share – non-GAAP

$

2.42

$

2.58

7%

$

3.67

$

4.00

9%

 
Cash flow provided by operating activities

$

52,548

$

62,200

$

15,388

$

79,337

Capital expenditures

$

5,490

$

6,685

$

13,195

$

13,713

The Company’s backlog was $1.8 billion as of December 31, 2025 and June 30, 2025.

Mr. Mehra further commented, “Our Security division delivered another strong quarter as second-quarter revenues increased 15% year-over-year, and included meaningful expansion of recurring services revenue as we continue to focus on expanding that opportunity for predictable and profitable growth. While bookings were softer than expected, partly due to the U.S. government shutdown delaying receipt of certain anticipated orders, and margins were lower given a difficult year-over-year comparison, the division maintains a healthy backlog and is seeing expanding global demand. We are well-positioned in Security to capitalize on future opportunities and drive sustained performance.”

Mr. Mehra continued, “Our Optoelectronics and Manufacturing division also generated robust financial results in the second quarter, achieving 12% revenue growth, operating margin expansion, and a strong book-to-bill ratio. This performance highlights the competitive advantage of our vertically-integrated global structure, which enables operational efficiency, flexibility and innovation. With increasing customer demand, the division is poised for continued growth.”

In November 2025, the Company issued $575 million of convertible senior notes due in 2031 at an interest rate of 0.50%. The net proceeds were partially used to pay-off the outstanding balance under the Company’s revolving credit facility and repurchase $146 million of its common stock.

Alan Edrick, Executive Vice President and Chief Financial Officer, stated, “We are thrilled to have completed our convertible notes financing at exceptionally favorable terms. This financing positions us to capture additional growth opportunities while lowering our overall cost of capital. The transaction underscores the strength of our business and is expected to result in significant interest savings, reinforcing our ability to invest in innovation and long-term success.”

Fiscal Year 2026 Outlook

The Company is raising its fiscal 2026 guidance for non-GAAP diluted earnings per share while maintaining its previous revenue guidance. The Company now anticipates higher non-GAAP adjusted earnings per diluted share and is raising its guidance to a range of $10.30 – $10.55, which represents 10% – 13% year-over-year growth. Actual revenues and non-GAAP diluted earnings per share could vary from this guidance due to factors discussed under “Forward-Looking Statements” or other factors.

The Company’s fiscal 2026 diluted earnings per share guidance is provided on a non-GAAP basis only. The Company does not provide a reconciliation of guidance for non-GAAP diluted EPS to GAAP diluted EPS (the most directly comparable GAAP measure) on a forward-looking basis because the Company is unable to provide a meaningful or accurate compilation of reconciling items and certain information is not available. This is due to the inherent difficulty and complexity in accurately forecasting the timing and amounts of various items included in the calculation of GAAP diluted EPS but excluded in the calculation of non-GAAP diluted EPS, such as acquisition costs and other non-recurring items that have not yet occurred, are out of the Company’s control or cannot otherwise reasonably be predicted. For the same reasons, the Company is unable to address the significance of unavailable information which may be material and therefore could result in GAAP diluted EPS being materially different from projected non-GAAP diluted EPS.

Conference Call Information

The Company will host a conference call and simultaneous webcast beginning at 1:30 pm PT (4:30 pm ET) today to discuss its financial results for the 2026 second fiscal quarter. To listen, please visit the Investor Relations section of the OSI Systems website at http://investors.osi-systems.com/index.cfm and follow the link that will be posted on the front page. A replay of the webcast will be available beginning shortly after the conclusion of the conference call for approximately three months thereafter. The replay can be accessed through the Company’s website at www.osi-systems.com.

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-E

Presentation of Non-GAAP Financial Measures

This earnings release includes a presentation of non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP operating income (loss) by segment and non-GAAP operating margin, all of which are non-GAAP financial measures. The presentation of these non-GAAP figures is provided to allow for the comparison of the underlying performance of the Company, excluding the impact of impairment, restructuring and other charges (including certain legal costs), amortization of intangible assets acquired through business acquisitions, and associated tax effects, and discrete income tax items. Although we exclude amortization of acquired intangible assets from our non-GAAP figures, revenue generated from such intangibles is included in determining non-GAAP financial performance of the Company. Management believes that the non-GAAP financial measures presented in this earnings release provide (i) enhanced insight into the ongoing operations of the Company, (ii) meaningful information regarding the Company’s financial results (excluding amounts management does not view as reflective of ongoing operating results) for purposes of planning, forecasting and assessing the performance of the Company’s businesses, (iii) a meaningful comparison of financial results of the current period against results of past periods and (iv) financial results that are generally more comparable to financial results of peer companies than are GAAP figures. Non-GAAP financial measures should not be assessed in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. Our non-GAAP financial measures may not be the same as measures used by other companies due to possible differences in methods and in the items or events for which adjustments are made.

Reconciliations of GAAP financial information to non-GAAP financial information are provided in the accompanying tables. The financial results calculated in accordance with GAAP and reconciliations from those financial results should be carefully evaluated.

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 the Company’s 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 the Company’s control and which may cause actual results to differ materially from those described in or implied by any forward-looking statement. Forward-looking statements include, but are not limited to, information provided regarding expected revenues, earnings, growth, cash flow generation, and operational performance in fiscal 2026 and beyond. The Company could be exposed to a variety of negative consequences as a result of delays related to the award of domestic and international contracts; failure to secure the renewal of key customer contracts; delays in customer programs; government shutdowns; delays in revenue recognition related to the timing of customer acceptance; the impact of potential information technology, cybersecurity or data security breaches; changes in domestic and foreign government spending and budgetary, procurement and trade policies adverse to the Company’s businesses; the impact of the Russia-Ukraine conflict or conflicts in the Middle East, including the potential for broad economic disruption; global economic uncertainty, including the impact of tariffs; material delays and cancellations of orders or deliveries thereon, supply chain disruptions, plant closures, or other adverse impacts on the Company’s ability to execute business plans; unfavorable currency exchange rate fluctuations; unfavorable interest rate fluctuations; effect of changes in tax legislation; market acceptance of the Company’s new and existing technologies, products, and services; the Company’s ability to win new business and convert orders received to sales within the current fiscal year; contract and regulatory compliance matters, and actions which, if brought, could result in judgments, settlements, fines, injunctions, debarment, or penalties; and other risks and uncertainties, including, but not limited to, those detailed herein and from time to time in the Company’s Securities and Exchange Commission filings, which could have a material and adverse impact on the Company’s business, financial condition, and results of operations. For additional information on these and other factors that could cause the Company’s future results to differ materially from those in any forward-looking statements, see the section titled “Risk Factors” in the Company’s most recently filed Annual Report on Form 10-K and other risks described therein and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. 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. The Company 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 required to do so under federal securities laws.

OSI SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

 

Three Months Ended

December 31,

 

Six Months Ended

December 31,

 

2024

 

2025

 

2024

 

2025

Revenues:

 

 

 

 

 

 

 

Products

$

333,671

 

 

$

350,762

 

 

$

589,479

 

 

$

626,572

 

Services

 

86,149

 

 

 

113,295

 

 

 

174,348

 

 

 

222,108

 

Total net revenues

 

419,820

 

 

 

464,057

 

 

 

763,827

 

 

 

848,680

 

Cost of goods sold:

 

 

 

 

 

 

 

Products

 

224,087

 

 

 

249,011

 

 

 

394,509

 

 

 

451,067

 

Services

 

48,582

 

 

 

63,417

 

 

 

100,665

 

 

 

122,799

 

Total cost of goods sold

 

272,669

 

 

 

312,428

 

 

 

495,174

 

 

 

573,866

 

Gross profit

 

147,151

 

 

 

151,629

 

 

 

268,653

 

 

 

274,814

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

70,722

 

 

 

70,201

 

 

 

142,945

 

 

 

137,156

 

Research and development

 

18,257

 

 

 

19,759

 

 

 

36,030

 

 

 

40,186

 

Impairment, restructuring and other charges, net.

 

215

 

 

 

2,874

 

 

 

1,393

 

 

 

5,604

 

Total operating expenses

 

89,194

 

 

 

92,834

 

 

 

180,368

 

 

 

182,946

 

Income from operations

 

57,957

 

 

 

58,795

 

 

 

88,285

 

 

 

91,868

 

Interest and other expense, net

 

(8,619

)

 

 

(10,713

)

 

 

(15,978

)

 

 

(18,111

)

Income before income taxes

 

49,338

 

 

 

48,082

 

 

 

72,307

 

 

 

73,757

 

Provision for income taxes

 

(11,519

)

 

 

(9,383

)

 

 

(16,552

)

 

 

(14,502

)

 

Net income

$

37,819

 

 

$

38,699

 

 

$

55,755

 

 

$

59,255

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

2.22

 

 

$

2.22

 

 

$

3.27

 

 

$

3.39

 

Weighted average shares outstanding – diluted

 

17,040

 

 

 

17,469

 

 

 

17,048

 

 

 

17,472

 

OSI SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

June 30, 2025

 

December 31, 2025

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

106,405

 

$

336,722

Accounts receivable, net

 

837,743

 

 

833,152

Inventories

 

407,174

 

 

452,613

Prepaid expenses and other current assets

 

71,539

 

 

64,358

Total current assets

 

1,422,861

 

 

1,686,845

Property and equipment, net

 

126,747

 

 

128,502

Goodwill

 

387,393

 

 

385,747

Intangible assets, net

 

183,290

 

 

183,394

Other non-current assets

 

120,966

 

 

137,753

Total Assets

$

2,241,257

 

$

2,522,241

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Bank lines of credit

$

178,000

 

$

Current portion of long-term debt

 

8,130

 

 

5,052

Accounts payable

 

205,181

 

 

212,715

Accrued payroll and related expenses

 

49,535

 

 

44,020

Advances from customers

 

68,184

 

 

63,518

Deferred revenue

 

77,788

 

 

93,207

Other current liabilities

 

110,120

 

 

116,850

Total current liabilities

 

696,938

 

 

535,362

Long-term debt

 

463,504

 

 

998,902

Other long-term liabilities

 

129,731

 

 

142,487

Total liabilities

 

1,290,173

 

 

1,676,751

Total stockholders’ equity

 

951,084

 

 

845,490

Total Liabilities and Stockholders’ Equity

$

2,241,257

 

$

2,522,241

NON-GAAP FINANCIAL MEASURES AND SEGMENT INFORMATION
 
Three Months Ended December 31,

2024

2025

(Dollars in thousands, except per-share amounts) Operating % of Net Diluted Operating % of Net Diluted
Revenues Income Revenues Income EPS Revenues Income Revenues Income EPS
OSI Consolidated
GAAP basis

$

419,820

 

$

57,957

 

13.8

%

$

37,819

 

$

2.22

 

$

464,057

 

$

58,795

 

12.7

%

$

38,699

 

$

2.22

 

Impairment, restructuring and other charges, net

 

215

 

0.1

%

 

215

 

 

0.01

 

 

2,874

 

0.6

%

 

2,874

 

 

0.15

 

Amortization of acquired intangible assets

 

4,698

 

1.1

%

 

4,698

 

 

0.28

 

 

3,478

 

0.7

%

 

3,478

 

 

0.20

 

Non-recurring retirement expense for former CEO

 

 

 

 

 

4,359

 

 

0.25

 

Tax effect of non-GAAP adjustments

 

(1,179

)

 

(0.07

)

 

(2,496

)

 

(0.14

)

Discrete tax benefit

 

(320

)

 

(0.02

)

 

(1,820

)

 

(0.10

)

Non-GAAP basis

$

62,870

 

15.0

%

$

41,233

 

$

2.42

 

$

65,147

 

14.0

%

$

45,094

 

$

2.58

 

 
 
Operating % of Operating % of
Revenues Income Revenues Revenues Income Revenues
Revenue and Operating Income by Segment
Security
GAAP basis

$

289,987

 

$

54,053

 

18.6

%

$

334,705

 

$

55,461

 

16.6

%

Impairment, restructuring and other charges, net

 

 

0.0

%

 

1,297

 

0.4

%

Amortization of acquired intangible assets

 

3,722

 

1.3

%

 

2,882

 

0.8

%

Non-GAAP basis

 

57,775

 

19.9

%

 

59,640

 

17.8

%

 
Optoelectronics & Manufacturing
GAAP basis

 

100,743

 

 

12,282

 

12.2

%

 

112,552

 

 

13,933

 

12.4

%

Impairment, restructuring and other charges, net

 

 

0.0

%

 

234

 

0.2

%

Amortization of acquired intangible assets

 

590

 

0.6

%

 

326

 

0.3

%

Non-GAAP basis

 

12,872

 

12.8

%

 

14,493

 

12.9

%

 
Healthcare
GAAP basis

 

44,854

 

 

1,722

 

3.8

%

 

36,534

 

 

(1,097

)

-3.0

%

Impairment, restructuring and other charges, net

 

 

0.0

%

 

1,357

 

3.8

%

Amortization of acquired intangible assets

 

386

 

0.9

%

 

270

 

0.7

%

Non-GAAP basis

 

2,108

 

4.7

%

 

530

 

1.5

%

 
Corporate/Elimination
GAAP basis

 

(15,764

)

 

(10,100

)

 

(19,734

)

 

(9,502

)

Impairment, restructuring and other charges, net

 

215

 

 

(14

)

Non-GAAP basis

 

(9,885

)

 

(9,516

)

 
OSI Consolidated
GAAP basis

$

419,820

 

 

57,957

 

13.8

%

$

464,057

 

 

58,795

 

12.7

%

Impairment, restructuring and other charges, net

 

215

 

0.1

%

 

2,874

 

0.6

%

Amortization of acquired intangible assets

 

4,698

 

1.1

%

 

3,478

 

0.7

%

Non-GAAP basis

$

62,870

 

15.0

%

$

65,147

 

14.0

%

 
NON-GAAP FINANCIAL MEASURES AND SEGMENT INFORMATION
 
Six Months Ended December 31,

2024

2025

(In thousands, except per-share amounts) Operating % of Net Operating % of Net
Revenues Income Revenues Income EPS Revenues Income Revenues Income EPS
OSI Consolidated
GAAP basis

$

763,827

 

$

88,285

 

11.6 %

$

55,755

 

$

3.27

 

$

848,680

 

$

91,868

 

10.8 %

$

59,255

 

$

3.39

 

Impairment, restructuring and other charges, net

 

1,393

 

0.2 %

 

1,393

 

 

0.09

 

 

5,604

 

0.7 %

 

5,604

 

 

0.31

 

Amortization of acquired intangible assets

 

8,565

 

1.1 %

 

8,565

 

 

0.50

 

 

7,453

 

0.9 %

 

7,453

 

 

0.43

 

Non-recurring retirement expense for former CEO

 

 

 

 

 

4,359

 

 

0.25

 

Tax effect of non-GAAP adjustments

 

(2,390

)

 

(0.14

)

 

(4,058

)

 

(0.23

)

Discrete tax benefit

 

(802

)

 

(0.05

)

 

(2,683

)

 

(0.15

)

Non-GAAP basis

$

98,243

 

12.9 %

$

62,521

 

$

3.67

 

$

104,925

 

12.4 %

$

69,930

 

$

4.00

 

 
 
Operating % of Operating % of
Revenues Income Revenues Revenues Income Revenues
Revenue and Operating Income by Segment
Security
GAAP basis

$

514,301

 

$

82,909

 

16.1 %

$

588,953

 

$

84,070

 

14.3 %
Impairment, restructuring and other charges, net

 

479

 

0.1 %

 

3,654

 

0.6 %
Amortization of acquired intangible assets

 

6,708

 

1.3 %

 

6,259

 

1.1 %
Non-GAAP basis

 

90,096

 

17.5 %

 

93,983

 

16.0 %
 
Optoelectronics & Manufacturing
GAAP basis

 

198,538

 

 

22,891

 

11.5 %

 

222,013

 

 

26,659

 

12.0 %
Impairment, restructuring and other charges, net

 

547

 

0.3 %

 

261

 

0.1 %
Amortization of acquired intangible assets

 

1,170

 

0.6 %

 

653

 

0.3 %
Non-GAAP basis

 

24,608

 

12.4 %

 

27,573

 

12.4 %
 
Healthcare
GAAP basis

 

81,956

 

 

2,522

 

3.1 %

 

77,277

 

 

749

 

1.0 %
Impairment, restructuring and other charges, net

 

152

 

0.2 %

 

1,689

 

2.2 %
Amortization of acquired intangible assets

 

687

 

0.8 %

 

541

 

0.7 %
Non-GAAP basis

 

3,361

 

4.1 %

 

2,979

 

3.9 %
 
Corporate/Elimination
GAAP basis

 

(30,968

)

 

(20,037

)

 

(39,563

)

 

(19,610

)

Impairment, restructuring and other charges, net

 

215

 

 

0

 

Non-GAAP basis

 

(19,822

)

 

(19,610

)

 
OSI Consolidated
GAAP basis

$

763,827

 

 

88,285

 

11.6 %

$

848,680

 

 

91,868

 

10.8 %
Impairment, restructuring and other charges, net

 

1,393

 

0.2 %

 

5,604

 

0.7 %
Amortization of acquired intangible assets

 

8,565

 

1.1 %

 

7,453

 

0.9 %
Non-GAAP basis

$

98,243

 

12.9 %

$

104,925

 

12.4 %
 

 

Contacts

For Additional Information, Contact:

OSI Systems, Inc.
Ajay Vashishat

Vice President

Telephone: (310) 349-2237

avashishat@osi-systems.com