OSI Systems Posts Record Fourth-Quarter Non-GAAP Earnings
Non-GAAP diluted earnings reached a record $3.78 a share in the fiscal fourth quarter as revenue slipped 4% to $484.1 million.
OSI Systems (OSIS), the designer of specialized electronic systems for security, optoelectronics and healthcare, posted record non-GAAP diluted earnings of $3.78 a share in the fiscal fourth quarter ended June 30, 2026, up 17% from a year earlier.
That earnings gain came after slower year-over-year non-GAAP growth of 7% in both the second and third quarters. GAAP diluted earnings rose 8% to $3.27 a share.
Revenue moved the other way. Sales were $484.1 million, down 4% from a year earlier, reversing a 2% year-over-year increase in the third quarter and an 11% increase in the second. President and Chief Executive Officer Ajay Mehra said Middle East conflicts shifted the timing of certain planned deliveries. He said the delays did not reflect order cancellations and remained in backlog with updated schedules.
Security, the largest division, was the source of the revenue decline. Security sales were $339.7 million, down from $367.0 million a year earlier. Non-GAAP operating margin in Security was 20.8%. Mehra said the division delivered strong profitability, cash generation and bookings, and ended the year with substantial backlog, a significant opportunity pipeline and recent program wins.
Optoelectronics and Manufacturing revenue was $117.8 million, up from $112.7 million a year earlier. Non-GAAP operating margin in that segment was 14.7%. Mehra said the division delivered revenue up about 5% year over year, on broad-based demand across aerospace, defense, healthcare, technology and industrial end markets.
Healthcare revenue was $44.8 million. Non-GAAP operating margin in Healthcare improved to 10.0% from 0.9% a year earlier. Mehra said the division delivered an improved fourth quarter, with revenue up approximately 5% and an adjusted operating margin of 10% compared with 1% in the prior-year quarter, citing operational improvements implemented throughout the year.
Consolidated non-GAAP operating margin was 17.7%. Operating cash flow was a record $182.1 million in the quarter.
Backlog was approximately $1.9 billion as of June 30, 2026, matching the approximately $1.9 billion reported as of March 31, 2026.
For the full fiscal year ended June 30, 2026, revenue was $1.786 billion, up 4% from $1.713 billion a year earlier. GAAP diluted earnings were $8.95 a share. Non-GAAP diluted earnings were a record $10.35 a share, up 11% from $9.36 a year earlier. Operating cash flow for the year was $275.9 million.
Cash and cash equivalents were $359.8 million at June 30, 2026, up from $106.4 million a year earlier. Bank lines of credit were reduced to zero. During the fiscal year, the company refinanced and expanded long-term debt and extended maturities.
The company repurchased 564,880 shares in the fourth quarter for $123.6 million. The board authorized an additional 1,000,000 shares, increasing remaining authorization to 1,078,731 shares. Chief Financial Officer Alan Edrick said the increase underscores confidence in the business and cash-flow generation.
OSI Systems introduced fiscal 2027 revenue guidance of $1.875 billion to $1.930 billion, or 5.0% to 8.1% year-over-year growth, and non-GAAP diluted earnings guidance of $11.13 to $11.49 a share, or 7.5% to 11.0% year-over-year growth. In the third quarter, it had reiterated fiscal 2026 revenue guidance of $1.825 billion to $1.867 billion and non-GAAP EPS of $10.30 to $10.55.
Mehra said the company’s opportunity pipeline, operating execution and focus on cash generation position it to advance strategic initiatives as it enters fiscal 2027.