EX-99.1 2 tm264404d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

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

oGAAP EPS of $2.22
oRecord 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) — January 29, 2026—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.

 

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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.

 

For Additional Information, Contact:

 

OSI Systems, Inc.

Ajay Vashishat

Vice President

Telephone: (310) 349-2237

avashishat@osi-systems.com

 

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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 

 

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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 

 

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NON-GAAP FINANCIAL MEASURES AND SEGMENT INFORMATION

 

   Three Months Ended December 31, 
   2024   2025 
      Operating   % of   Net   Diluted       Operating   % of   Net   Diluted 
(Dollars in thousands, except per-share amounts)  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%          

 

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NON-GAAP FINANCIAL MEASURES AND SEGMENT INFORMATION

 

   Six Months Ended December 31, 
   2024   2025 
      Operating   % of   Net           Operating   % of   Net     
(In thousands, except per-share amounts)  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%          

 

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