OSI Systems (OSIS -2.63%), a global supplier of security, healthcare, and optoelectronics products, released its earnings for the quarter ending June 30, 2025, on Aug. 21, 2025. The company posted record results, with revenue of $504.99 million and non-GAAP earnings per share (EPS) of $3.24, both beating analyst estimates of $493.25 million in revenue and $3.19 EPS. Compared to the same period last year, revenue increased 5% while EPS was up 14%. This period capped a strong year for OSI Systems, as demand for its security solutions and recurring service contracts fueled improved profitability in fiscal 2025.
| Metric | Q4 2025 | Q4 2025 Estimate | Q4 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $3.24 | $3.19 | $2.84 | 14% |
| Revenue | $505 million | $493.25 million | $481 million | 5% |
| Operating Income (Non-GAAP) | $79.5 million | $71.2 million | 12% | |
| Operating Margin (Non-GAAP) | 15.7% | 14.8% | 0.9 pp | |
| Net Income (Non-GAAP) | $56.5 million | $49.7 million | 13% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q3 2025 earnings report.
About OSI Systems and its business focus
OSI Systems designs and manufactures electronic systems and components for three end markets: security inspection, optoelectronics, and healthcare. Its products range from baggage and cargo scanners for airports and borders, to flexible electronic circuits used in industrial and medical devices, and patient monitoring equipment for hospitals and clinics.
The company’s main growth drivers are demand for security and screening solutions in response to global threats, and a growing installed base that generates recurring service revenue. It also leverages vertical integration, meaning it controls much of its supply chain, which helps it manage costs and respond quickly to technology trends. Technological innovation and compliance with international regulations are key to maintaining its market positions.
Highlights and key developments this quarter
This period saw OSI Systems post its highest-ever quarterly and annual results, as demand for security and inspection systems outpaced company expectations. The Security division, representing about 70% of annual sales, grew revenue to $1.196 billion (GAAP) in fiscal 2025, a 14.7% jump over fiscal 2024. This surge helped push Security’s non-GAAP operating margin over 20% and reinforced the division’s profitability. Management stated, “Fourth quarter performance was driven by strong growth in the Security division’s service revenues resulting from an increasing installed base of our products.”
In addition to product sales like X-ray checkpoint scanners and cargo screening systems, service revenue from installation, maintenance, and software has become increasingly important. The company recorded a book-to-bill ratio of 1.0, meaning new orders matched or surpassed shipments, and reported a year-end backlog over $1.8 billion as of fiscal 2025. Diversification across aviation, ports, defense, and borders broadened OSI Systems’ exposure and reduced risk from reliance on previous major contracts, such as those in Mexico.
The Optoelectronics and Manufacturing division also delivered growth, lifting sales by 15% and 6.1% for the first nine months of fiscal 2025. This unit provides key components such as flexible circuit assemblies used in medical devices and industrial equipment. Its operating margin (GAAP) grew alongside revenue in fiscal 2025.
The Healthcare division’s profit margins remained thin, ending the year at only 3.5% on a non-GAAP basis. While patient monitoring and connected care products remain potential growth areas, this business trails significantly behind OSI Systems’ core security operations.
Looking ahead and management guidance
OSI Systems provided strong guidance for fiscal 2026, projecting revenue between $1.805 billion and $1.850 billion, representing annual growth of approximately 5.4% to 8.0%. Non-GAAP diluted EPS for fiscal 2026 is projected at $10.11 to $10.39. The company pointed to its robust backlog, diversified order pipeline, and expanded $825 million credit facility as support for continued investment and operational flexibility. Management commented, “With robust bookings, solid backlog and high visibility into our opportunity pipeline, we are poised for success in fiscal 2026.”
Investors should monitor several key factors in the coming quarters: the sustainability of rapid service revenue growth in security, progress on turning around the healthcare division, management of working capital—especially accounts receivable, which climbed sharply recently—and the impact of rising long-term debt. Any shifts in global regulations, supply chain dynamics, or major contract award delays could bring volatility.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted. The company’s fiscal year and quarter ended June 30, 2025.
