OSI Systems Posts Record Revenue of $403.472 Million and Backlog of $2.1 Billion
Key Facts
OSI Systems on October 29 reported record revenue of $403.472 million for the first quarter of fiscal 2027, covering the three months ended September 30, up 5% from $384.623 million in the year-earlier period. Non-GAAP diluted EPS rose to $1.66 from $1.42, a 17% increase. GAAP EPS also increased to $1.51 from $1.18, up 28%. Meanwhile, gross margin declined to 30.7% from 32.0% a year earlier. The results came as backlog reached a record, while the company left its fiscal-year revenue outlook unchanged and raised its adjusted EPS range.
Bookings totaled $583 million during the quarter, lifting the book-to-bill ratio to 1.4 times. Backlog rose to $2.1 billion at the end of September, compared with $1.9 billion on June 30, 2026. The balance reflects a broader base of orders entering the next quarter, alongside quarterly revenue growth. Net income also rose to $24.572 million from $20.556 million in the year-earlier period. Operating income increased less, to $33.570 million from $33.073 million.
Management attributed the decline in gross margin to lower healthcare sales and a shift in revenue mix within the security segment, as well as a higher share of optoelectronics and manufacturing, two businesses with lower gross margins. The CEO described healthcare performance as "weak during the quarter," adding that the company is focused on improving it and expects the segment to return to growth during the current fiscal year. In optoelectronics and manufacturing, revenue rose 9% including intersegment sales, and 16% from sales to external customers. The segment expanded its adjusted operating margin, according to the company. Management said the security segment's operating margin was affected by a less favorable revenue mix.
On cash, operating cash flow rose to $37.088 million in the quarter, compared with $17.137 million a year earlier. The CFO said cash flow more than doubled, alongside an increase in net income during the period. The company also continued buying back shares, repurchasing 305,559 shares in the first quarter for a total of about $62 million. The board had authorized an additional 1 million shares for the buyback program in August. As of September 30, 773,172 shares remained under the authorization.
The company reaffirmed its fiscal 2027 revenue outlook at a range of $1.875 billion to $1.930 billion. It raised its non-GAAP diluted EPS range to $11.28–$11.64 from $11.13–$11.49 previously. Management said it expects strong double-digit growth in service revenue during the fiscal year, with growth accelerating over its course. It also expects margins to improve as the revenue mix stabilizes and service revenue increases. For the security segment, management said operating margin could improve over the rest of the fiscal year as the mix stabilizes and service revenue rises.
The company's shares closed at $208.17 on October 29, then traded at $216.04 after the close that day, according to Investing.com data. EL7 data show the same closing price. The move followed the earnings announcement and updated earnings outlook. The after-hours share price was above the price recorded at the session close. Margin trends and healthcare performance remain among the factors management identified for the current fiscal year.