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Why OSI Systems Shares Got Clobbered

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of OSI Systems (NASDAQ: OSIS  ) have gotten clobbered today by as much as 36% on reports that the company manipulated test results related to its Rapiscan security unit.

So what: The company's Rapiscan division is one of two key suppliers of body-scanning machines to the TSA, and a congressman said that the company may have tried to defraud the government by falsifying an operational test related to the machines. The company staunchly denies these allegations and says it is "fully cooperating" with the TSA in the subsequent investigation.

Now what: OSI Systems has now received a show cause letter from the TSA alleging that Rapiscan didn't disclose relevant issues in a "timely or complete manner." The company says it could not have manipulated data since the tests are government-controlled. In the press release, OSI Systems says that TSA testimony confirms this. The company will still have its work cut out to clear its name.

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Comments from our Foolish Readers

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  • Report this Comment On November 15, 2012, at 11:43 PM, philsie1 wrote:

    Wow! Congrats again MF on your top-notch cut&paste analysis. If you knew anything you'd know that the show-cause letter and statements of fraud by the distinguished Republican blowhard from Alabama (or Arkansas or wherever) are COMPLETELY unrelated to one another.

    Although your article is in complete compliance with MF Internal Guideline 201.2-F that states: "MF shall make press releases on any and all stocks that are in the top 20 on any day. Feel free to snip portions of content from existing articles."

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10/21/2016 4:00 PM
OSIS $66.25 Up +0.03 +0.05%
OSI Systems CAPS Rating: ***