OSI Systems released fiscal fourth-quarter results on August 20 that presented divergent narratives between profit margins and revenue performance. The company reported full-year revenue of $1.79 billion below its own guidance, with fourth-quarter revenue declining 4% year over year to $484 million. However, non-GAAP earnings per share reached a record $3.78 for the quarter, representing 17% growth, and full-year non-GAAP EPS climbed 11% to $10.35.
The revenue shortfall traced primarily to approximately $50 million in security division deliveries delayed by Middle East conflict-related site access constraints past the fiscal year-end of June 30. Security division revenue in the quarter fell 7% to $340 million. The company also faced challenging comparisons against Mexico project revenue recorded a year earlier, which reduced full-year revenue by roughly $150 million, though this headwind is expected to moderate to under $25 million in fiscal 2027. Fourth-quarter operating cash flow reached a record $182 million, with full-year operating cash flow totaling $276 million.
OSI Systems closed the year with a substantially strengthened balance sheet, with cash rising to $360 million from $106 million a year earlier. The company repurchased $123.6 million in stock during the fourth quarter, representing roughly 565,000 shares, with the board authorizing an additional million shares for repurchase. The company’s backlog of $1.9 billion, built on bookings across all three divisions, includes several major new contracts: a $200 million Customs and Border Protection contract for vehicle inspection systems, an $85 million mobile X-ray contract, and a $235 million Homeland Defense radio frequency award described as the company’s largest RF contract to date.
Operationally, the Optoelectronics and Manufacturing division posted 9% full-year revenue growth to $451 million, while the healthcare division’s operating margin improved significantly to 10% in the quarter from 1% a year earlier. The company secured a partnership making its Rapiscan division the official security screening provider for the LA28 Olympics and has involvement in Golden Dome-related defense initiatives. Hedge fund ownership increased from 22 to 26 funds in the most recent quarter, though short interest remained elevated at 15.87% of float. Management guided for fiscal 2027 revenue of $1.875 billion to $1.93 billion and non-GAAP EPS of $11.13 to $11.49, with growth expected to be concentrated in the second half of the year.
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