OSIS earnings analysis
What we found in OSIS's 10-K: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
OSI delivered another year of revenue and earnings growth, with fiscal 2026 revenue up 4.2% to $1.786 billion, diluted EPS up to $8.95, and operating cash flow rising to $275.9 million. The Security division remains the primary growth and strategic platform, supported by $1.8 billion of remaining performance obligations and expanding international revenue, while Optoelectronics and Manufacturing also accelerated. However, margin compression, Healthcare declines, Middle East-related delivery delays, semiconductor availability and the runoff of large international contracts temper the outlook; the sizable share repurchase program and improved liquidity support a constructive but more execution-sensitive view.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Three-Year Growth Continued
- Fiscal 2026 revenue increased 4.2% to $1.786 billion from $1.713 billion in fiscal 2025 and $1.539 billion in fiscal 2024. Diluted EPS rose to $8.95 from $8.71 and $7.38, respectively, although gross margin declined to 33.2% from 34.3% and 34.5%.
- Security-Led, Vertically Integrated Model
- Security remains the core franchise, representing 69.9% of fiscal 2026 revenue, while Optoelectronics and Manufacturing grew 7.7% to $375.3 million. Management describes the company as a vertically integrated designer and manufacturer serving homeland security, healthcare, defense and aerospace markets.
- $1.8 Billion Backlog Visibility
- Remaining performance obligations were approximately $1.8 billion at June 30, 2026, with approximately 59% expected to convert to revenue over the next 12 months. This provides substantial forward revenue visibility, though timing remains dependent on customer milestones and acceptance procedures.
- Sharp Cash-Flow Improvement
- Operating cash flow increased to $275.9 million from $97.6 million in fiscal 2025, primarily due to improved working capital and collections on large Security projects. Cash and equivalents increased to $359.8 million from $106.4 million.
- Aggressive Share Repurchases
- Capital allocation shifted decisively toward repurchases: OSI repurchased 1,111,825 shares for $271.9 million in fiscal 2026, versus 531,314 shares for $80.4 million in fiscal 2025. On August 20, 2026, the Board authorized another 1,000,000 shares, bringing remaining authorization to 1,078,731 shares.
- International Revenue Expansion
- International exposure remains a growth engine: external revenue in the United Kingdom rose to $503.5 million from $373.0 million, while Asia-Pacific revenue increased to $316.4 million from $295.7 million. Total EMEA revenue reached $581.3 million and Asia-Pacific revenue $316.4 million in fiscal 2026.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Middle East Delivery Disruptions
- The filing states that Middle East conflicts affected fourth-quarter fiscal 2026 results through delays in shipments, customer acceptance procedures, project schedules and new orders. OSI generated $581.3 million of fiscal 2026 external revenue in EMEA, including $77.9 million from Europe, the Middle East and Africa excluding the United Kingdom, underscoring international execution exposure.
- Semiconductor Supply Constraints
- The company reports tighter supply and higher costs for memory and semiconductor components tied to demand from data-center and AI infrastructure. Continued component constraints could adversely affect operations; fiscal 2026 gross margin already fell to 33.2% from 34.3%, with tariffs, logistics and component costs cited as factors affecting profitability.
- Contract Runoff and Higher Debt
- Revenue from three significant international Security contracts declined from $404 million in fiscal 2024 to $231 million in fiscal 2025 and $79 million in fiscal 2026, with management expecting relatively lower revenue from these contracts in fiscal 2027 and beyond. At the same time, total debt increased to $1.001 billion from $649.6 million, including $575.0 million of 0.50% convertible notes due 2031.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $8.95
- Gross margin
- 33.2%
- Operating margin
- 12.3%
- Segment
- Security: $1.248 billion revenue, 69.9% of consolidated revenue, up 4.3% year over year
- Segment
- Optoelectronics and Manufacturing: $375.3 million revenue, 21.0% of consolidated revenue, up 7.7% year over year
- Segment
- Healthcare: $162.7 million revenue, 9.1% of consolidated revenue, down 3.4% year over year
What they said about what is next.
The 10-K does not provide quantitative annual revenue or EPS guidance. Management states that approximately 59% of the $1.8 billion of remaining performance obligations is expected to be recognized over the next 12 months.
The filing reads better than the one before it.
What came before.
- 10-Q · May 4, 2026
- OSI Systems, Inc. reported a solid performance for Q3 2026, with revenues rising to $453.2 million, up 2.0% from $444.3 million in Q3 2025. Gross margins slightly declined to 33.2%, and diluted EPS improved to $2.60,…
- 10-K · August 25, 2025
- OSI Systems describes itself as a vertically integrated designer and manufacturer serving security, healthcare and defense/aerospace end markets through three operating divisions. The company’s stated strategy…
- 10-Q · January 24, 2025
- OSI Systems, Inc. reported a strong quarter with revenue rising to $419.8 million, up 12.4% from $373.2 million in the previous year's quarter. The diluted EPS increased to $2.22 from $2.11 year-over-year, reflecting a…
- 10-Q · October 25, 2024
- OSI Systems reported quarterly revenue of $344,007,000 (three months ended September 30, 2024), up $64,797,000 or 23.2% from $279,210,000 in the prior-year quarter, driving higher gross profit of $121,502,000 and net…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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