OSI Systems recently delivered a sharp profitability improvement in its Healthcare division during the fiscal fourth quarter of 2026, with adjusted operating margin expanding to 10% from approximately 1% a year earlier.
Healthcare revenue increased approximately 5% year-over-year even as overall OSI Systems quarterly revenue declined 4% to $484.1 million from $505 million.
The approximately 900-basis-point improvement in Healthcare adjusted operating margin illustrates the impact of operational changes OSI implemented throughout fiscal 2026.
The Healthcare business provides patient monitoring, diagnostic cardiology and related clinical technologies, and management said it is continuing to expand the division’s installed base while investing in product development.
The stronger Healthcare performance came alongside improving results in OSI’s Optoelectronics and Manufacturing division, where revenue also increased approximately 5% year-over-year. Security remained the company’s largest business, although geopolitical disruptions in the Middle East shifted the timing of certain deliveries.
At the consolidated level, GAAP diluted EPS increased 8% to $3.27 despite the revenue decline, while non-GAAP diluted EPS increased 17% to a record $3.78.
Operating cash flow reached a fourth-quarter record of $182.1 million, compared with only $0.6 million in the prior-year period. OSI ended fiscal 2026 with record backlog of approximately $1.9 billion, up from $1.8 billion a year earlier.
OSI also repurchased 564,880 shares during the quarter for $123.6 million and ended the fiscal year with $359.8 million in cash, compared with $106.4 million a year earlier.
For fiscal 2027, the company expects revenue of $1.875 billion to $1.93 billion, representing growth of 5% to 8.1%, and non-GAAP EPS of $11.13 to $11.49.
KEY QUOTES:
“The Healthcare division delivered an improved fourth quarter, with revenues up approximately 5% and an adjusted operating margin of 10%.”
Ajay Mehra, President and CEO of OSI Systems
