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Aug 20, 2026, 4:02 PM ETTechnology

OSI Systems — Fiscal 2026 Earnings Summary

OSISOSI SYSTEMS INC
Source

Financial Performance

  • Fiscal 2026 total revenues reached $1.79 billion, a 4% increase year-over-year from $1.71 billion; Q4 2026 revenues were $484.1 million, a 4% decrease from $505.0 million in Q4 2025.
  • Fiscal 2026 GAAP diluted earnings per share (EPS) were $8.95, up 3% from $8.71; Non-GAAP diluted EPS were $10.35, an 11% increase from $9.36.
  • Q4 2026 GAAP diluted EPS were $3.27, up 8% from $3.03; Non-GAAP diluted EPS were $3.78, a 17% increase from $3.24.
  • Fiscal 2026 operating cash flow was $276 million, compared to $97.6 million in the prior year; Q4 2026 operating cash flow was $182 million.
  • Fiscal 2026 capital expenditures were $30.6 million; Q4 2026 capital expenditures were $9.3 million.
  • Cash and cash equivalents ended fiscal 2026 at $359.8 million, up from $106.4 million a year earlier.
  • Deferred revenue increased to $91.0 million as of June 30, 2026, from $77.8 million in the prior year.
  • Long-term debt increased to $998.5 million as of June 30, 2026, from $463.5 million in the prior year; bank lines of credit were reduced to zero.
  • Non-GAAP operating margin for fiscal 2026 was 14.2%, compared to 14.1% in the prior year; Q4 2026 Non-GAAP operating margin was 17.7%.

Guidance and Future Outlook

  • Fiscal 2027 revenue guidance is set at $1.875 billion to $1.930 billion, representing 5.0% to 8.1% year-over-year growth.
  • Fiscal 2027 Non-GAAP diluted EPS guidance is $11.13 to $11.49, representing 7.5% to 11.0% year-over-year growth.
  • Management indicated the company is well-positioned to advance key strategic initiatives and drive long-term value through an opportunity pipeline, disciplined operating execution, and a focus on cash generation.

Business Segments and Product Lines

  • Security Division: Delivered strong profitability and cash generation in Q4; revenues were impacted by delivery timing shifts due to Middle East conflicts, though underlying demand remains encouraging and delays do not reflect cancellations.
  • Optoelectronics and Manufacturing Division: Q4 revenues increased approximately 5% year-over-year driven by broad-based demand across aerospace, defense, healthcare, technology, and industrial end markets.
  • Healthcare Division: Q4 revenues increased approximately 5% year-over-year; adjusted operating margin improved to 10% in Q4 2026 from 1% in the prior-year quarter.
  • Fiscal 2026 backlog was approximately $1.9 billion, up from $1.8 billion a year ago.

Market and Competitive Landscape

  • The company serves customers in over 170 countries with global sales, service, R&D, and manufacturing capabilities.
  • Management highlighted differentiation through highly engineered products, precision manufacturing capabilities, and global operational reach.
  • The company noted recent program wins and a substantial opportunity pipeline within the Security division.

Risks and Challenges

  • Revenue headwinds from Middle East conflicts have shifted the timing of certain planned deliveries.
  • Forward-looking statements cite risks including delays in contract awards, failure to renew key customer contracts, government shutdowns, and delays in revenue recognition due to customer acceptance timing.
  • Potential risks include cybersecurity breaches, changes in government spending and trade policies, impacts from the Russia-Ukraine conflict or Middle East conflicts, global economic uncertainty, tariffs, supply chain disruptions, unfavorable currency and interest rate fluctuations, and contract compliance matters.

Management Commentary and Tone

  • CEO Ajay Mehra described Fiscal 2026 as a strong year capped by record Q4 non-GAAP earnings and operating cash flow.
  • Management expressed confidence in the opportunity pipeline and the ability to execute business plans despite geopolitical disruptions.
  • The tone emphasized operational improvements, particularly in the Healthcare division, and the strength of bookings leading to a substantial backlog.

Other Key Points

  • The Company repurchased 564,880 shares during Q4 2026 for an aggregate cash amount of $123.6 million.
  • During fiscal 2026, the Company refinanced and expanded its long-term debt, extended maturities, and reduced bank lines of credit to zero while returning capital to shareholders.
  • The Company does not provide a reconciliation of fiscal 2027 non-GAAP diluted EPS guidance to GAAP diluted EPS due to the inherent difficulty in forecasting non-recurring items and acquisition costs.
  • A conference call and webcast were hosted on August 20, 2026, to discuss the results.