Osi Systems Inc 10-Q for FY2023 Q1

Osi Systems Inc (OSIS)

10-Q 2022-10-28 For: 2022-09-30

Added on April 10, 2026

About this 10-Q

Osi Systems Inc filed this 10-Q on October 28, 2022, covering the quarter ended September 30, 2022 (FY2023 Q1).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $268.07M; down 4.0% from $279.26M a year earlier
Net income: $11.24M; down 41.0% from net income of $19.05M a year earlier
Diluted EPS: $0.65; down 37.5% from $1.04 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Delaware		33-0238801
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		OSIS		The Nasdaq Global Select Market

Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐


		PAGE

PART I — FINANCIAL INFORMATION		3

Item 1 —	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets at June 30, 2022 and September 30, 2022	3
	Condensed Consolidated Statements of Operations for the three months ended September 30, 2021 and 2022	4
	Condensed Consolidated Statements of Comprehensive Income for the three months ended September 30, 2021 and 2022	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended September 30, 2021 and 2022	6
	Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2021 and 2022	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3 —	Quantitative and Qualitative Disclosures about Market Risk	27
Item 4 —	Controls and Procedures	27

PART II — OTHER INFORMATION		28
Item 1 —	Legal Proceedings	28
Item 1A —	Risk Factors	28
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3 —	Defaults Upon Senior Securities	28
Item 4 —	Mine Safety Disclosures	28
Item 5 —	Other Information	28
Item 6 —	Exhibits	29
Signatures		30


	June 30, 2022		September 30, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	64,202	$	53,990
Accounts receivable, net		307,973		313,506
Inventories		333,907		361,949
Prepaid expenses and other current assets		40,062		41,599
Total current assets		746,144		771,044
Property and equipment, net		109,684		107,976
Goodwill		336,357		335,825
Intangible assets, net		138,370		138,202
Other assets		112,595		114,720
Total assets	$	1,443,150	$	1,467,767
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Bank lines of credit	$	60,000	$	215,000
Current portion of long-term debt		244,575		8,110
Accounts payable		125,204		144,420
Accrued payroll and related expenses		46,379		34,967
Advances from customers		19,917		29,973
Other accrued expenses and current liabilities		117,879		130,011
Total current liabilities		613,954		562,481
Long-term debt		48,668		143,150
Deferred income taxes		11,112		11,115
Other long-term liabilities		130,992		126,368
Total liabilities		804,726		843,114
Commitments and contingencies (Note 10)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value— 10,000,000 shares authorized; no shares issued or outstanding		—		—
Common stock, $0.001 par value—100,000,000 shares authorized; issued and outstanding, 16,870,050 shares at June 30, 2022 and 16,854,153 shares at September 30, 2022		17		17
Retained earnings		663,869		656,017
Accumulated other comprehensive loss		(25,462)		(31,381)
Total stockholders’ equity		638,424		624,653
Total liabilities and stockholders’ equity	$	1,443,150	$	1,467,767


	Three Months Ended September 30,
	2021		2022
Net revenues:
Products	$	207,212	$	196,954
Services		72,045		71,117
Total net revenues		279,257		268,071
Cost of goods sold:
Products		142,906		143,369
Services		37,021		37,205
Total cost of goods sold		179,927		180,574
Gross profit		99,330		87,497
Operating expenses:
Selling, general and administrative		57,323		53,438
Research and development		14,817		14,540
Impairment, restructuring and other charges, net		2,510		1,219
Total operating expenses		74,650		69,197
Income from operations		24,680		18,300
Interest and other expense, net		(2,016)		(3,432)
Income before income taxes		22,664		14,868
Provision for income taxes		(3,612)		(3,633)
Net income	$	19,052	$	11,235
Earnings per share:
Basic	$	1.06	$	0.66
Diluted	$	1.04	$	0.65
Shares used in per share calculation:
Basic		17,947		16,924
Diluted		18,306		17,180


	Three Months Ended September 30, 2021
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—June 30, 2021	17,854,110	$	105,724	$	548,842	$	(14,746)	$	639,820
Exercise of stock options	162,393		155		—		—		155
Vesting of RSUs	310,077		—		—		—		—
Shares issued under employee stock purchase program	27,960		1,990		—		—		1,990
Stock-based compensation expense	—		7,113		—		—		7,113
Repurchase of common stock	(168,506)		(16,231)		—		—		(16,231)
Taxes paid related to net share settlement of equity awards	(244,641)		(18,611)		—		—		(18,611)
Adoption of ASU 2020-06 for convertible notes	—		(26,763)		18,956		—		(7,807)
Net income	—		—		19,052		—		19,052
Other comprehensive loss	—		—		—		(2,169)		(2,169)
Balance—September 30, 2021	17,941,393	$	53,377	$	586,850	$	(16,915)	$	623,312


	Three Months Ended September 30, 2022
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—June 30, 2022	16,870,050	$	17	$	663,869	$	(25,462)	$	638,424
Exercise of stock options	2,919		194		—		—		194
Vesting of RSUs	286,119		—		—		—		—
Shares issued under employee stock purchase program	28,603		1,969		—		—		1,969
Stock-based compensation expense	—		7,177		—		—		7,177
Repurchase of common stock	(208,427)		(208)		(17,079)		—		(17,287)
Taxes paid related to net share settlement of equity awards	(125,111)		(9,132)		(2,008)		—		(11,140)
Net income	—		—		11,235		—		11,235
Other comprehensive loss	—		—		—		(5,919)		(5,919)
Balance—September 30, 2022	16,854,153	$	17	$	656,017	$	(31,381)	$	624,653


	June 30, 2022								September 30, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets—Insurance company contracts	$	—	$	40,284	$	—	$	40,284	$	—	$	41,419	$	—	$	41,419
Assets – Interest rate swap contract	$	—	$	—	$	—	$	—	$	—	$	3,540	$	—	$	3,540
Liabilities—Convertible debt	$	—	$	242,302	$	—	$	242,302	$	—	$	—	$	—	$	—
Liabilities—Contingent consideration	$	—	$	—	$	28,212	$	28,212	$	—	$	—	$	25,853	$	25,853


	September 30,		September 30,
	2021		2022
Total interest and other expense, net presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded	$	(2,016)	$	(3,432)
Amount recognized in other comprehensive loss		—		3,540
Amount reclassified from accumulated other comprehensive loss to interest expense, net		—		120


	June 30,		September 30,
Accounts receivable, net	2022		2022
Accounts receivable	$	326,849	$	330,759
Less allowance for doubtful accounts		(18,876)		(17,253)
Total	$	307,973	$	313,506


	June 30,		September 30,
Inventories	2022		2022
Raw materials	$	213,290	$	225,559
Work-in-process		46,873		72,041
Finished goods		73,744		64,349
Total	$	333,907	$	361,949



	June 30,		September 30,
Property and equipment, net	2022		2022
Land	$	15,028	$	15,028
Buildings, civil works and improvements		47,309		47,255
Leasehold improvements		11,599		12,081
Equipment and tooling		128,425		128,518
Furniture and fixtures		3,592		3,454
Computer equipment		21,208		21,230
Computer software		25,153		25,344
Computer software implementation in process		9,422		9,676
Construction in process		5,283		5,563
Total		267,019		268,149
Less accumulated depreciation and amortization		(157,335)		(160,173)
Property and equipment, net	$	109,684	$	107,976


					Optoelectronics
					And
	Security		Healthcare		Manufacturing
	Division		Division		Division		Consolidated
Balance as of June 30, 2022	$	225,555	$	43,187	$	67,615	$	336,357
Goodwill acquired or adjusted during the period		2,240		—		—		2,240
Foreign currency translation adjustment		(217)		(281)		(2,274)		(2,772)
Balance as of September 30, 2022	$	227,578	$	42,906	$	65,341	$	335,825


		June 30, 2022						September 30, 2022
	Weighted	Gross						Gross
	Average	Carrying		Accumulated		Intangibles		Carrying		Accumulated		Intangibles
	Lives	Value		Amortization		Net		Value		Amortization		Net
Amortizable assets:
Software development costs	8-9 years	$	64,096	$	(18,934)	$	45,162	$	65,667	$	(17,472)	$	48,195
Patents	19 years		8,541		(2,987)		5,554		8,598		(3,098)		5,500
Developed technology	10 years		66,901		(31,071)		35,830		66,916		(32,833)		34,083
Customer relationships	7 years		53,736		(32,785)		20,951		53,721		(34,129)		19,592
Total amortizable assets			193,274		(85,777)		107,497		194,902		(87,532)		107,370
Non-amortizable assets:
In-process R&D			533		—		533		533		—		533
Trademarks			30,340		—		30,340		30,299		—		30,299
Total intangible assets		$	224,147	$	(85,777)	$	138,370	$	225,734	$	(87,532)	$	138,202


2023 (remaining 9 months)	$	14,084
2024		17,732
2025		17,332
2026		15,870
2027		11,742
Thereafter		30,610
Total	$	107,370


	June 30,		September 30,
	2022		2022		Change		% Change
Unbilled revenue (included in accounts receivable, net)	$	43,287	$	45,245	$	1,958	5	%


	Three Months Ended September 30,
	2021		2022
Operating lease cost	$	2,275	$	2,826
Variable lease cost		184		406
Short-term lease cost		279		223
	$	2,738	$	3,455


					Facility
	Acquisition-		Employee		Closure /		Legal
	Related		Termination		Consolidation		Costs and
	Costs		Costs		Cost		Settlements		Total
Balance as of June 30, 2022	$	—	$	181	$	23	$	1,780	$	1,984
Restructuring and other charges, net		23		256		—		940		1,219
Payments, adjustments and reimbursements, net		(23)		(59)		(10)		(1,680)		(1,772)
Balance as of September 30, 2022	$	—	$	378	$	13	$	1,040	$	1,431


	Balance Sheet Category	June 30, 2022		September 30, 2022
Operating lease ROU assets, net	Other assets	$	39,461	$	37,698

Operating lease liabilities, current portion	Other accrued expenses and current liabilities	$	9,700	$	9,664
Operating lease liabilities, long-term	Other long-term liabilities		30,363		28,684
Total operating lease liabilities		$	40,063	$	38,348

Weighted average remaining lease term					4.7 years
Weighted average discount rate					3.5	%


	September 30, 2022
Less than one year	$	10,529
1 – 2 years		9,742
2 – 3 years		7,903
3 – 4 years		6,283
4 – 5 years		5,424
Thereafter		1,700
		41,581
Less: imputed interest		(3,233)
Total lease liabilities	$	38,348


	Three Months Ended September 30, 2021
					Optoelectronics and
			Healthcare		Manufacturing
	Security Division		Division		Division		Corporate		Total
Employee termination costs	$	336	$	—	$	—	$	—	$	336
Facility closures/consolidation		(61)		—		—		—		(61)
Legal costs, net		—		—		—		2,235		2,235
Total	$	275	$	—	$	—	$	2,235	$	2,510


		Weighted
		Average		Weighted-Average	Aggregate
	Number of	Exercise		Remaining Contractual	Intrinsic Value
	Options	Price		Term	(in thousands)
Outstanding at June 30, 2022	110,645	$	82.43
Granted	—		—
Exercised	(2,919)		66.46
Expired or forfeited	(1,408)		80.45
Outstanding at September 30, 2022	106,318		82.90	6.1 years	$	162
Exercisable at September 30, 2022	66,027		77.14	4.5 years	$	162


		Weighted-
		Average
	Shares	Fair Value
Nonvested at June 30, 2022	427,447	$	90.17
Granted	324,224		89.25
Vested	(286,119)		97.22
Forfeited	(11,420)		88.87
Nonvested at September 30, 2022	454,132	$	85.10


Beginning fair value, June 30, 2022	$	28,212
Addition of contingent earnout obligations		567
Foreign currency translation adjustment		(382)
Changes in fair value for contingent earnout obligations		(2,314)
Payments on contingent earnout obligations		(230)
Ending fair value, September 30, 2022	$	25,853


	Q1		% of		Q1		% of
	Fiscal 2022		Net Revenues		Fiscal 2023		Net Revenues		$Change		% Change
Security	$	149.5	54	%	$	145.0	54	%	$	(4.5)	(3.0)	%
Healthcare		50.6	18			43.6	16			(7.0)	(13.8)
Optoelectronics and Manufacturing		79.2	28			79.5	30			0.3	0.4
Total net revenues	$	279.3	100	%	$	268.1	100	%	$	(11.2)	(4.0)	%


					Maximum number (or
					approximate dollar
					value) of
				Total number of	shares (or
				shares (or units)	units)
				purchased as	that may
	Total number of	Average price		part of publicly	yet be purchased
	shares (or units)	paid per share (or		announced plans or	under the plans or
	purchased	unit)		programs	programs (1)
July 1 to July 31, 2022	—	$	—	—	1,253,401
August 1 to August 31, 2022	65,100	$	86.94	65,100	1,188,301
September 1 to September 30, 2022	143,327	$	81.12	143,327	1,913,673
	208,427			208,427


Exhibit Number		Description

10.1		Eighth Amendment to Credit Agreement dated August 11, 2022 between Wells Fargo Bank, N.A. and OSI Systems, Inc. (1)

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

104		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)


	OSI SYSTEMS, INC.

	By:	/s/ Deepak Chopra
		Deepak Chopra
		President and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Alan Edrick
		Alan Edrick
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)


Date: October 28, 2022

	/s/ Deepak Chopra
	Deepak Chopra
	Chief Executive Officer
	(Principal Executive Officer)