Core Viewpoint - OSI Systems, Inc. has received a repeat order worth approximately $12 million from a leading healthcare OEM for optical sensors used in medical devices [1] Group 1: Company Developments - The order is from the Optoelectronics and Manufacturing division of OSI Systems [1] - Ajay Mehra, President and CEO of OSI Systems, expressed satisfaction with the repeat order from a long-standing customer [1]

Core Viewpoint - OSI Systems (OSIS) shares experienced a 4.9% increase, attributed to notable trading volume and strong revenue growth across its divisions, particularly in Security, Optoelectronics, and Healthcare [1]. Group 1: Company Performance - OSI Systems is expected to report quarterly earnings of $2.52 per share, reflecting a year-over-year increase of 4.1% [2]. - Revenue projections for OSI are set at $451.8 million, which indicates a 7.6% growth compared to the same quarter last year [2]. - The consensus EPS estimate for OSI has remained unchanged over the last 30 days, suggesting stability in earnings expectations [3]. Group 2: Industry Context - OSI operates within the Zacks Electronics - Miscellaneous Components industry, where another company, Fabrinet (FN), also saw a 4.9% increase in its stock price, closing at $479.17 [3]. - Fabrinet's consensus EPS estimate is $3.26, representing a year-over-year change of 24.9%, with its rank being 3 (Hold) [4].

Core Viewpoint - OSI Systems (OSIS) has received an upgrade to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, reflecting the company's changing earnings picture [1][2]. - Changes in future earnings potential, as indicated by earnings estimate revisions, are strongly correlated with near-term stock price movements [4][6]. - Rising earnings estimates for OSI indicate an improvement in the company's underlying business, which is expected to drive the stock price higher [5][10]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7][9]. - The upgrade of OSI to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions for OSI - For the fiscal year ending June 2026, OSI is expected to earn $10.42 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 1.9% over the past three months [8].

Core Insights - OSI Systems, Inc. has announced a $20 million order from an international customer for a radiological threat detection solution [1] - The solution will support the deployment of a radiation monitoring network designed to detect radioactive threats over a wide area [1] - The integrated network is expected to operate continuously for effective monitoring [1]

Core Points - OSI Systems, Inc. announced the pricing of a private offering of $500 million aggregate principal amount of 0.50% convertible senior notes due 2031 [1] - The offering size was increased from a previously announced amount, indicating strong demand for the notes [1] Summary by Category Company Announcement - The company is offering $500 million in convertible senior notes with a 0.50% interest rate, maturing in 2031 [1] - The offering is targeted at qualified institutional buyers under Rule 144A of the Securities Act [1] Financial Details - The initial offering size was increased from a previously announced amount, reflecting positive market conditions or investor interest [1]

Group 1 - The article does not provide any specific content or key points related to a company or industry [1]

Core Insights - OSI Systems reported revenue of $384.62 million for the quarter ended September 2025, reflecting an 11.8% increase year-over-year and exceeding the Zacks Consensus Estimate of $376.67 million by 2.11% [1] - Earnings per share (EPS) for the quarter was $1.42, up from $1.25 in the same quarter last year, surpassing the consensus EPS estimate of $1.37 by 3.65% [1] Revenue Breakdown - Healthcare division revenue was $40.74 million, exceeding the estimated $37.92 million, representing a year-over-year increase of 9.8% [4] - Intersegment eliminations reported a revenue of $-19.83 million, compared to an estimate of $-15.49 million, showing a significant year-over-year change of 30.4% [4] - Optoelectronics and Manufacturing division revenue, including intersegment revenues, was $109.46 million, surpassing the estimated $103.82 million, with a year-over-year change of 11.9% [4] - Security division revenue reached $254.25 million, slightly above the estimated $253.02 million, marking a 13.3% increase compared to the previous year [4] Operating Income Analysis - Non-GAAP operating income for the Security Division was $34.34 million, below the estimated $37.78 million [4] - Non-GAAP operating income for the Corporate/Elimination segment was reported at $-10.09 million, slightly better than the estimated $-10.7 million [4] - Non-GAAP operating income for the Healthcare Division was $2.45 million, significantly exceeding the estimate of $0.38 million [4] - Non-GAAP operating income for the Optoelectronics and Manufacturing Division was $13.08 million, slightly above the estimated $12.83 million [4] Stock Performance - OSI shares have returned +1.5% over the past month, while the Zacks S&P 500 composite has changed by +3.6% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Core Insights - OSI Systems (OSIS) reported quarterly earnings of $1.42 per share, exceeding the Zacks Consensus Estimate of $1.37 per share, and up from $1.25 per share a year ago, representing an earnings surprise of +3.65% [1] - The company achieved revenues of $384.62 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.11%, and an increase from $344.01 million year-over-year [2] - OSI shares have increased approximately 48.9% year-to-date, significantly outperforming the S&P 500's gain of 17.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.53 on revenues of $450.32 million, and for the current fiscal year, it is $10.23 on revenues of $1.83 billion [7] - The estimate revisions trend for OSI was favorable prior to the earnings release, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Electronics - Miscellaneous Components industry, to which OSI belongs, is currently ranked in the top 17% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Revenues increased 12% year-over-year to a Q1 record of $385 million, with underlying consolidated revenues growing roughly 26% when excluding contributions from major contracts in Mexico and acquired businesses [4][12] - Record Q1 non-GAAP adjusted EPS reached $1.42, reflecting strong revenue growth [4][12] - Q1 bookings were strong, with a book-to-bill ratio of approximately 1.1, resulting in a record Q1 backlog approaching $1.9 billion [5][12] Business Line Data and Key Metrics Changes - Security division revenues were $254 million, a 13% year-over-year growth, driven by higher service revenues and robust sales of aviation and RF detection products [6][12] - Optoelectronics division achieved record Q1 revenues of $110 million, a 12% increase year-over-year, supported by growth across diversified product lines [10][12] - Healthcare division sales rose 10% year-over-year, indicating progress from improvement plans under new leadership [10][12] Market Data and Key Metrics Changes - Service revenues grew 23% during the quarter, reflecting a shift towards higher recurring revenues from ongoing service and support [6][12] - The company noted strong demand across various regions, including EMEA, Americas, and Asia-Pacific, with significant contributions from service revenues [22][23] Company Strategy and Development Direction - The company is focused on innovation, operational excellence, and customer satisfaction, with a diversified business model supporting growth [5][11] - There is an emphasis on expanding capabilities through potential acquisitions, particularly in complementary technologies that enhance service offerings [30][31] - The company is well-positioned to capitalize on government investments in advanced security systems due to geopolitical factors [8][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future outlook, citing a robust backlog and strong cash flow generation expected in Fiscal 2026 [11][18] - The impact of the government shutdown has been limited, with essential services continuing to operate without significant disruptions [27][28] - Management anticipates that funding from government initiatives will begin to flow in the second half of the fiscal year [35] Other Important Information - The company raised its Fiscal 2026 guidance for revenues to a range of $1.825 billion to $1.867 billion, reflecting a growth rate of 6.5% to 9.0% [18][19] - Non-GAAP adjusted earnings per diluted share guidance was also raised to a range of $10.20 to $10.48, representing 9% to 12% year-over-year growth [18][19] Q&A Session Summary Question: What products and markets are driving strength in the Security division? - Management noted diversified growth across regions, with strong performance in service revenues and RF detection products contributing significantly [22][23] Question: What is the expected growth rate for service revenues this year? - While specific guidance on service versus product revenues is not provided, management expects faster growth in recurring service revenue compared to product revenues [24] Question: How is the company addressing the impact of reduced revenues from Mexico? - Management indicated that while there is a significant reduction in revenues from Mexico, the overall business has been able to cover these headwinds with growth in other product lines [29] Question: What is the status of unbilled receivables in Mexico? - Management reported progress in reducing unbilled receivables and expects significant cash flow from Mexico throughout Fiscal 2026 [30] Question: What is the outlook for margin expansion in the Security division? - Management anticipates margin expansion as the company moves past difficult comparisons related to Mexico revenues, with expectations for improved margins in the upcoming quarters [32][34]

Financial Performance - Total net revenues for the three months ended September 30, 2025, increased to $384,623, up 11.9% from $344,007 in the same period of 2024[10] - Gross profit for the three months ended September 30, 2025, was $123,185, representing a slight increase from $121,502 in the prior year[10] - Net income for the three months ended September 30, 2025, rose to $20,556, compared to $17,936 for the same period in 2024, reflecting a growth of 14.4%[10] - Basic earnings per share increased to $1.22 for the three months ended September 30, 2025, up from $1.07 in the prior year[10] - The company reported a comprehensive income of $20,242 for the three months ended September 30, 2025, compared to $15,897 in the prior year[12] - Net income available to common stockholders for the three months ended September 30, 2025, was $20.556 million, representing a 14.4% increase from $17.936 million in the same period of 2024[19] - Basic earnings per share increased to $1.22 for the three months ended September 30, 2025, compared to $1.07 for the same period in 2024, reflecting a 14% growth[19] - Total revenues for the three months ended September 30, 2025, were $384,623 thousand, an increase from $344,007 thousand in the same period of 2024[87] Cash and Liquidity - Cash and cash equivalents at the end of the period increased to $124,416, compared to $106,405 at the beginning of the period[15] - Cash and cash equivalents totaled $124.4 million as of September 30, 2025, with approximately 64% held by foreign subsidiaries[21] - Cash flow from operations was $17.1 million in Q1 fiscal 2026, a significant improvement compared to cash used in operations of $37.2 million in the same period last year[119] - Net cash used in investing activities decreased to $10.9 million in Q1 fiscal 2026 from $87.5 million in Q1 fiscal 2025, primarily due to the absence of business acquisitions in Q1 fiscal 2026[120] - Net cash provided by financing activities was $12.2 million in Q1 fiscal 2026, down from $113.8 million in the same prior-year period, largely due to lower net proceeds from bank borrowings[121] Assets and Liabilities - Total current liabilities decreased to $696,938 as of September 30, 2025, down from $791,662 at June 30, 2025[9] - Long-term debt increased to $463,504 as of September 30, 2025, compared to $436,844 at June 30, 2025[9] - Total assets as of September 30, 2025, were $2,299,156, up from $2,241,257 at June 30, 2025[9] - The fair value of the company's convertible notes was $505.974 million as of September 30, 2025, reflecting an increase from $472.770 million as of June 30, 2025[24] - As of September 30, 2025, long-term debt totaled $442.2 million, with future principal payments scheduled at $4.1 million for 2026 and $347.7 million for 2030[64] Operational Metrics - Operating expenses for the three months ended September 30, 2025, were $90,112, slightly down from $91,174 in the same period of 2024[10] - Segment income from operations for the Security Division was $30,966 thousand for the three months ended September 30, 2025[87] - Revenue recognized from contract liabilities existing at the beginning of the period for the three months ended September 30, 2025 was $36.7 million[46] - The Security division's product revenues increased by approximately $9.6 million, while service revenues rose by $20.4 million in Q1 fiscal 2026[108] Acquisitions and Investments - The company acquired a privately held provider of military and surveillance solutions for approximately $76.0 million, with potential contingent consideration of up to $24.0 million, totaling a purchase consideration of $85.7 million[35] - The acquisition date fair value of total assets acquired was $113.9 million, including $30.7 million in goodwill and $47.3 million in other intangible assets[35] Expenses and Charges - Restructuring and other charges recognized during the three months ended September 30, 2025 amounted to $2.7 million, compared to $1.2 million for the same period in 2024, indicating a significant increase[51] - Total restructuring and other charges amounted to $2.730 million, with employee termination costs contributing $300,000 and acquisition-related costs at $22,000[54] - Selling, general and administrative expenses decreased by $5.2 million to $67.0 million in Q1 fiscal 2026, primarily due to favorable foreign currency exchange rates[112] - Research and development expenses increased by 14.6% to $20.4 million in Q1 fiscal 2026, compared to $17.8 million in Q1 fiscal 2025[112] Taxation - The effective tax rate for the three months ended September 30, 2025, was 19.9%, down from 21.9% in the same period of 2024[83] - The company recorded a net discrete tax benefit of $0.9 million for the three months ended September 30, 2025, related to equity-based compensation[83] Stock and Shareholder Information - The company has not paid any dividends since its IPO in 1997 and does not intend to pay dividends in the foreseeable future[72] - As of September 30, 2025, there are 1,190,556 shares remaining available for repurchase under the stock repurchase program[71] - The company issued $350.0 million principal amount of 2.25% convertible senior notes due in August 2029, with net proceeds of $340.4 million after issuance costs[57] - The company recorded stock-based compensation expense of $6.199 million for the three months ended September 30, 2025, down from $6.422 million in the same period of 2024[66] - The company granted 48,185 performance-based RSUs during the three months ended September 30, 2025, which are contingent on achieving specific performance metrics[69]