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What: Shares of OSI Systems (NASDAQ:OSIS) got crushed today, down by 17% at the low after the company provided an update on its TSA Show Cause Letter.
So what: Reports surfaced last November that the company was manipulating test results for its Rapiscan security units, while analysts defended the company at the time. OSI Systems will begin formal proceedings that will allow the company to provide information and communicate directly with Department of Homeland Security officials.
Now what: CEO Deepak Chopra reiterated confidence that OSI Systems will be able to clear its name as a responsible TSA vendor. OSI will now be able to prove its compliance with its obligations, but acknowledges some possible risks. There are three possible outcomes, the worst of which would be OSI Systems being debarred. The company also said there are restrictions on its ability to seek and/or accept additional government contracts.
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