OSI Systems (OSIS) Q3 2026 earnings summary

Executive summary

• Achieved record Q3 revenues of $453.2 million, up 2% year-over-year, with strong Security and Optoelectronics performance and a record $1.9 billion backlog; book-to-bill ratio was 1.3x.

• Non-GAAP EPS reached $2.60, up 7% year-over-year; GAAP EPS was $2.33, down 3% year-over-year.

• Net income for Q3 FY2026 was $40.2 million, compared to $41.1 million in the prior year quarter.

• Collected $74 million from Mexico receivables shortly after quarter end, strengthening Q4 cash flow.

• For the nine months ended March 31, 2026, net revenues rose 7.8% year-over-year to $1.30 billion, with net income of $99.5 million.

Financial highlights

• Security division Q3 revenues were $319.2 million, up 1.4% year-over-year, with 25% growth excluding Mexico contracts; Optoelectronics & Manufacturing Q3 revenues increased 10% to $111 million.

• Healthcare division Q3 revenues declined 6.9% to $40.7 million due to lower patient monitoring sales.

• Q3 gross margin was 33.2%, slightly down year-over-year due to less favorable product mix.

• Q3 operating income: $53.2 million (GAAP), $62.9 million (non-GAAP); operating margin: 11.7% (GAAP), 13.9% (non-GAAP).

• Cash and cash equivalents at March 31, 2026 were $345.2 million, up from $106.4 million at June 30, 2025.

Outlook and guidance

• Fiscal 2026 revenue guidance reiterated at $1.825 billion–$1.867 billion; non-GAAP diluted EPS guidance at $10.30–$10.55.

• Q4 revenues may be impacted by recent DHS shutdown and Middle East conflicts, but resolution could present future opportunities.

• Management expects continued uncertainty due to global macroeconomic factors, supply chain constraints, and geopolitical tensions.

• Substantial cash inflows expected in Q4 and fiscal 2027 as Mexico receivables are collected.

• The company anticipates sufficient liquidity from cash, operations, and credit facilities for the next 12 months and beyond.