# OSIS earnings call intelligence LOPJLB CallCard / temporal rollup · freemium · [stock page](https://www.lopjlb.com/stock/OSIS) · [Earnings tab](https://www.lopjlb.com/stock/OSIS?tab=earnings) Updated: 2026-08-22T05:35:30 Quarters analyzed: 8 ## Cross-quarter narrative Across the eight earnings calls OSI Systems consistently posted record revenues while navigating a shifting risk landscape. Early 2025 calls highlighted strong backlog‑driven visibility, record security growth and a successful convertible debt financing, yet flagged healthcare sales weakness, optoelectronics inventory adjustments and FX headwinds. By Q2 2025 margin pressure emerged from product mix, prompting focus on service‑mix expansion. The Q4 2025 call introduced timing risks around U.S. security funding and a new optoelectronics plant ramp‑up, while noting a large new $7 billion opto order. In 2026 the narrative shifted to external macro‑events: a U.S. government shutdown and a steep decline in Mexican security contracts compressed security bookings and margins, prompting higher EPS guidance but flat revenue outlook. Mid‑year, geopolitical tension in the Middle East caused delivery delays, and DHS shutdowns added procurement uncertainty. Throughout, the backlog remained robust, service revenue grew, and the company continued disciplined capital allocation, share repurchases and selective acquisitions. By FY27 the firm projects modest top‑line growth supported by new IDIQ awards and expanded service revenue, while still managing margin pressure, concentration risk and geopolitical delivery challenges. ## Latest CallCard · Q4 OSI Systems FY26 revenue missed guidance due to $50M Middle East delivery delays, but record $1.9B backlog, $182M Q4 cash flow, margin expansion, and new IDIQ/defense awards support FY27 outlook of 5-8% revenue growth. **Guidance:** maintained — Provided initial FY27 guidance: revenue growth 5-8%, non-GAAP EPS growth 7-11%, with modest conservatism and continued R&D investment. **Tone:** mgmt 0.3 · Q&A pressure 0.4 · divergence 0.2 Management emphasized record backlog, strong cash flow, margin expansion, and new contract wins while acknowledging revenue shortfall due to Middle East delays. ### Demand visibility Record $1.9B backlog, strong pipeline, new IDIQ awards, RF/Golden Dome programs, LA28 partnership provide multi-year visibility. Backlog at record $1.9B with deferred Middle East deliveries remaining in backlog. CDP awarded two 5-year IDIQs totaling ~$285M ceilings with initial task orders. RF business secured $235M undefinitized contract for over-the-horizon radar and participates in Shield IDIQ for Golden Dome. LA28 Olympic security partnership signed. TSA checkpoint contract still years away. ### Margins / costs Q4 gross margin 34.7% (+140bps YoY), adjusted operating margin 17.7% (+200bps YoY) with all three divisions expanding margins; FY27 service revenue growth expected to drive further margin expansion. Security margin 20.8% (+40bps), Opto 14.7% (+110bps), Healthcare 10% (from 1%). SG&A down 7% YoY, R&D up slightly. Expect service revenues to grow faster than product, carrying higher margins. Combined SG&A+R&D as % sales decreased for 8th consecutive year. ### Capital allocation Repurchased 565K shares in Q4 ($123.6M), board authorized additional 1M shares (1.1M available), refinanced credit facility, net leverage 2.1x, strong cash generation $276M FY operating cash flow. Q4 operating cash flow record $182M, collected $159M from Mexico customer reducing AR from $345M to $190M. CapEx $9.3M vs D&A $13.3M. Cash $360M, no drawn credit lines. Share count reduced ~3% via buybacks. ### Milestones - **CDP IDIQ - Relocatable Rapiscan Passenger Vehicle Inspection Systems** [on_track]: 5-year IDIQ with ~$200M ceiling; initial $21M task order received. - **CDP IDIQ - Van Mounted Mobile X-ray Inspection Systems** [on_track]: 5-year IDIQ with ~$85M ceiling; initial task orders received. - **Homeland Defense Over-the-Horizon Radar Transmit Subsystems** [on_track]: Undefinitized contract action ~$235M not-to-exceed; largest RF award to date. - **Shield IDIQ for Golden Dome Initiatives** [on_track]: Participant in IDIQ supporting Golden Dome programs; vehicle for future awards. - **LA28 Olympic & Paralympic Games Security Partnership** [delivered]: Agreement signed establishing Rapiscan as official supporter and physical screening solutions provider. - **Next-Generation Patient Monitoring Platform (Healthcare)** [on_track]: Product development initiatives advancing behind next-gen platform. - **Security-as-a-Service and SaaS Offerings (CertScan)** [on_track]: Growing recurring revenue priority; SaaS and turnkey security services expanding. - **Mexico Security Contract Deliveries** [delayed]: ~$50M planned deliveries deferred beyond June 30 due to conflict-related delays and site access constraints; remain in backlog. ### Fears / risks - **Geopolitical/Delivery Risk**: Middle East conflict causing delivery delays and site access constraints, deferring revenue and bookings. - **Customer Concentration**: Mexico customer represented 40% of total AR at Q3 end ($345M), reduced to 25% ($190M) at Q4; further collections expected but concentration remains. ## Quarter one-liners - **2026 Q4:** OSI Systems FY26 revenue missed guidance due to $50M Middle East delivery delays, but record $1.9B backlog, $182M Q4 cash flow, margin expansion, and new IDIQ/defense awards support FY27 outlook of 5-8% revenue growth. - **2026 Q3:** OSI Systems posted record Q3 revenue and backlog, saw 25% security growth excluding Mexico, but flagged Mexico contract headwinds, DHS shutdown and Middle‑East conflict as near‑term risks while remaining optimistic about FY27 growth. - **2026 Q2:** OSI Systems posted record Q2 revenue up 11% with strong security and optoelectronics growth, but noted softer security bookings due to a U.S. shutdown and a steep drop in Mexico contracts, raising FY non‑GAAP EPS guidance while keeping revenue guidance flat. - **2026 Q1:** — - **2025 Q4:** OSI Systems posted record Q4 revenue and EPS, a strong backlog and upbeat FY26 outlook, but notes timing risks around U.S. security funding and a ramp‑up of its new Opto plant. - **2025 Q3:** — - **2025 Q2:** OSI Systems delivered record Q2 FY25 revenue of $420M (+12% YoY) with strong Security division growth (+16%), record backlog of $1.8B, and operating cash flow of $53M, while new CEO Ajay Mehra highlights expanding pipeline and service revenue mix shift. - **2025 Q1:** OSI Systems posted record Q1 FY25 revenue of $344M (+23% YoY) driven by Security (+36%), backlog $1.8B, raised guidance, completed $350M convertible debt financing and bolt-on RF acquisition. ## Theme arcs - **Revenue growth** (improving): Record revenues reported each quarter despite macro headwinds - **Backlog strength** (stable): Backlog consistently around $1.8‑$1.9B providing visibility - **Security segment performance** (deteriorating): Growth slowed in 2026 due to U.S. shutdown and Mexico contract drop - **Optoelectronics ramp‑up** (new): New manufacturing facilities in Texas and Mexico introduced short‑term margin drag - **Healthcare challenges** (deteriorating): Sales weakness and platform delays persisted from 2025 through 2026 - **Margin pressure** (deteriorating): Product‑mix shifts, FX and tariff impacts repeatedly compressed gross margins ## Guidance path 2025 Q1:raised → 2025 Q2:maintained → 2025 Q3:vague → 2025 Q4:maintained → 2026 Q1:vague → 2026 Q2:raised → 2026 Q3:maintained → 2026 Q4:maintained --- Research context only. Not personalized investment advice. API: `GET /bff/api/bigfive/earnings-intel/OSIS`