Osi Systems Inc 10-Q for FY2024 Q3

Osi Systems Inc (OSIS)

10-Q 2024-04-30 For: 2024-03-31

Added on April 10, 2026

About this 10-Q

Osi Systems Inc filed this 10-Q on April 30, 2024, covering the quarter ended March 31, 2024 (FY2024 Q3).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $405.41M; up 33.8% from $302.89M a year earlier
Diluted EPS: $1.95; up 53.5% from $1.27 a year earlier

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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, 2023 and March 31, 2024	3
	Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2023 and 2024	4
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2023 and 2024	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended March 31, 2023 and 2024	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2023 and 2024	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3 —	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4 —	Controls and Procedures	31

PART II — OTHER INFORMATION		32
Item 1 —	Legal Proceedings	32
Item 1A —	Risk Factors	32
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3 —	Defaults Upon Senior Securities	32
Item 4 —	Mine Safety Disclosures	32
Item 5 —	Other Information	32
Item 6 —	Exhibits	35
Signatures		36


	June 30,		March 31,
	2023		2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	76,750	$	101,443
Accounts receivable, net		380,845		503,828
Inventories		338,008		442,797
Prepaid expenses and other current assets		44,300		71,182
Total current assets		839,903		1,119,250
Property and equipment, net		108,933		110,399
Goodwill		349,505		352,119
Intangible assets, net		140,857		142,056
Other assets		116,488		107,251
Total assets	$	1,555,686	$	1,831,075
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Bank lines of credit	$	215,000	$	349,000
Current portion of long-term debt		8,076		8,212
Accounts payable		139,011		172,115
Accrued payroll and related expenses		51,243		43,554
Advances from customers		21,250		65,888
Other accrued expenses and current liabilities		137,114		122,913
Total current liabilities		571,694		761,682
Long-term debt		136,491		131,214
Deferred income taxes		6,571		7,293
Other long-term liabilities		114,765		117,473
Total liabilities		829,521		1,017,662
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, 16,755,772 shares at June 30, 2023 and 17,048,704 shares at March 31, 2024		9,835		16,667
Retained earnings		735,957		816,551
Accumulated other comprehensive loss		(19,627)		(19,805)
Total stockholders’ equity		726,165		813,413
Total liabilities and stockholders’ equity	$	1,555,686	$	1,831,075


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2024		2023		2024
Net revenues:
Products	$	223,724	$	327,360	$	637,563	$	817,248
Services		79,165		78,046		228,994		240,603
Total net revenues		302,889		405,406		866,557		1,057,851
Cost of goods sold:
Products		156,534		223,570		458,197		547,938
Services		42,569		45,741		120,870		133,772
Total cost of goods sold		199,103		269,311		579,067		681,710
Gross profit		103,786		136,095		287,490		376,141
Operating expenses:
Selling, general and administrative		53,707		66,584		161,148		197,986
Research and development		14,852		17,144		43,848		49,416
Restructuring and other charges, net		890		1,004		4,366		2,496
Total operating expenses		69,449		84,732		209,362		249,898
Income from operations		34,337		51,363		78,128		126,243
Interest and other expense, net		(5,727)		(7,407)		(14,339)		(19,689)
Income before income taxes		28,610		43,956		63,789		106,554
Provision for income taxes		(6,802)		(9,913)		(14,392)		(23,079)
Net income	$	21,808	$	34,043	$	49,397	$	83,475
Earnings per share:
Basic	$	1.30	$	2.00	$	2.93	$	4.92
Diluted	$	1.27	$	1.95	$	2.88	$	4.82
Shares used in per share calculation:
Basic		16,809		17,042		16,858		16,954
Diluted		17,184		17,425		17,151		17,301


	Three Months Ended March 31, 2023
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—December 31, 2022	16,819,609	$	2,530	$	672,371	$	(27,147)	$	647,754
Exercise of stock options	11,848		891		—		—		891
Vesting of RSUs	5,510		—		—		—		—
Shares issued under employee stock purchase program	30,652		2,072		—		—		2,072
Stock-based compensation expense	—		7,112		—		—		7,112
Repurchase of common stock	(138,469)		(12,362)		(603)		—		(12,965)
Taxes paid related to net share settlement of equity awards	(2,029)		(226)		—		—		(226)
Net income	—		—		21,808		—		21,808
Other comprehensive income	—		—		—		471		471
Balance—March 31, 2023	16,727,121	$	17	$	693,576	$	(26,676)	$	666,917


	Three Months Ended March 31, 2024
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—December 31, 2023	17,011,639	$	7,308	$	782,508	$	(19,373)	$	770,443
Exercise of stock options	2,278		203		—		—		203
Vesting of RSUs	4,428		—		—		—		—
Shares issued under employee stock purchase program	31,968		2,296		—		—		2,296
Stock-based compensation expense	—		7,069		—		—		7,069
Taxes paid related to net share settlement of equity awards	(1,609)		(209)		—		—		(209)
Net income	—		—		34,043		—		34,043
Other comprehensive loss	—		—		—		(432)		(432)
Balance—March 31, 2024	17,048,704	$	16,667	$	816,551	$	(19,805)	$	813,413


	Nine Months Ended March 31, 2023
						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	19,614		1,330		—		—		1,330
Vesting of RSUs	312,038		—		—		—		—
Shares issued under employee stock purchase program	59,255		4,041		—		—		4,041
Stock-based compensation expense	—		21,528		—		—		21,528
Repurchase of common stock	(400,230)		(17,067)		(17,682)		—		(34,749)
Taxes paid related to net share settlement of equity awards	(133,606)		(9,832)		(2,008)		—		(11,840)
Net income	—		—		49,397		—		49,397
Other comprehensive loss	—		—		—		(1,214)		(1,214)
Balance—March 31, 2023	16,727,121	$	17	$	693,576	$	(26,676)	$	666,917


	Nine Months Ended March 31, 2024
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—June 30, 2023	16,755,772	$	9,835	$	735,957	$	(19,627)	$	726,165
Exercise of stock options	16,767		1,387		—		—		1,387
Vesting of RSUs	389,042		—		—		—		—
Shares issued under employee stock purchase program	61,781		4,327		—		—		4,327
Stock-based compensation expense	—		21,486		—		—		21,486
Taxes paid related to net share settlement of equity awards	(174,658)		(20,368)		(2,881)		—		(23,249)
Net income	—		—		83,475		—		83,475
Other comprehensive loss	—		—		—		(178)		(178)
Balance—March 31, 2024	17,048,704	$	16,667	$	816,551	$	(19,805)	$	813,413


	June 30, 2023								March 31, 2024
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets—Insurance company contracts	$	—	$	47,181	$	—	$	47,181	$	—	$	48,982	$	—	$	48,982
Assets – Interest rate swap contract	$	—	$	5,369	$	—	$	5,369	$	—	$	4,660	$	—	$	4,660
Liabilities—Contingent consideration	$	—	$	—	$	21,181	$	21,181	$	—	$	—	$	18,888	$	18,888


	June 30,		March 31,
Accounts receivable, net	2023		2024
Accounts receivable	$	395,218	$	519,476
Less allowance for doubtful accounts		(14,373)		(15,648)
Total	$	380,845	$	503,828


	June 30,		March 31,
Inventories	2023		2024
Raw materials	$	233,217	$	257,846
Work-in-process		56,329		88,323
Finished goods		48,462		96,628
Total	$	338,008	$	442,797


	June 30,		March 31,
Property and equipment, net	2023		2024
Land	$	15,691	$	15,524
Buildings, civil works and improvements		49,166		48,648
Leasehold improvements		13,553		13,642
Equipment and tooling		135,703		142,962
Furniture and fixtures		3,632		3,397
Computer equipment		24,119		22,367
Computer software		26,981		30,532
Computer software implementation in process		9,705		6,212
Construction in process		4,108		6,137
Total		282,658		289,421
Less accumulated depreciation and amortization		(173,725)		(179,022)
Property and equipment, net	$	108,933	$	110,399


			Optoelectronics
			And
	Security		Manufacturing		Healthcare
	Division		Division		Division		Consolidated
Balance as of June 30, 2023	$	230,662	$	70,388	$	48,455	$	349,505
Goodwill acquired		2,072		828		—		2,900
Foreign currency translation adjustment		25		(310)		(1)		(286)
Balance as of March 31, 2024	$	232,759	$	70,906	$	48,454	$	352,119


	Nine Months Ended March 31,
	2023		2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	49,397	$	83,475
Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of effects from acquisitions:
Depreciation and amortization		28,819		30,485
Stock-based compensation expense		21,528		21,486
Provision for (recovery of) losses on accounts receivable		(4,890)		2,059
Deferred income taxes		942		(524)
Amortization of debt discount and issuance costs		196		—
Other		(46)		10
Changes in operating assets and liabilities—net of business acquisitions:
Accounts receivable		13,248		(118,989)
Inventories		(37,860)		(101,446)
Prepaid expenses and other assets		(4,924)		(41,503)
Accounts payable		2,134		32,933
Accrued payroll and related expenses		2,151		(8,155)
Advances from customers		13,963		43,805
Deferred revenue		11,101		3,105
Other		(23,081)		(5,199)
Net cash provided by (used in) operating activities		72,678		(58,458)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment		(12,691)		(13,604)
Proceeds from sale of property and equipment		309		293
Purchases of certificates of deposit		(4,940)		—
Proceeds from maturities of certificates of deposit		3,827		10,329
Acquisition of businesses, net of cash acquired		(4,616)		(9,046)
Payments for intangible and other assets		(12,275)		(12,906)
Net cash used in investing activities		(30,386)		(24,934)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on bank lines of credit		155,000		134,000
Proceeds from long-term debt		100,654		1,110
Payments on long-term debt		(247,818)		(6,248)
Proceeds from exercise of stock options and employee stock purchase plan		5,371		5,714
Payments of contingent consideration		(3,668)		(602)
Repurchases of common stock		(34,749)		—
Taxes paid related to net share settlement of equity awards		(11,840)		(23,249)
Net cash (used in) provided by financing activities		(37,050)		110,725
Effect of exchange rate changes on cash		(3,822)		(2,640)


	June 30, 2023						March 31, 2024
	Gross						Gross
	Carrying		Accumulated		Intangibles		Carrying		Accumulated		Intangibles
	Value		Amortization		Net		Value		Amortization		Net
Amortizable assets:
Software development costs	$	77,844	$	(20,285)	$	57,559	$	86,576	$	(19,986)	$	66,590
Patents		8,636		(3,404)		5,232		9,003		(3,745)		5,258
Developed technology		68,274		(38,353)		29,921		71,208		(44,174)		27,034
Customer relationships		55,780		(39,101)		16,679		51,536		(39,894)		11,642
Total amortizable assets		210,534		(101,143)		109,391		218,323		(107,799)		110,524
Non-amortizable assets:
In-process R&D		533		—		533		—		—		—
Trademarks		30,933		—		30,933		31,532		—		31,532
Total intangible assets	$	242,000	$	(101,143)	$	140,857	$	249,855	$	(107,799)	$	142,056


2024 (remaining 3 months)	$	4,922
2025		16,299
2026		12,704
2027		8,522
2028		5,659
Thereafter		62,418
Total	$	110,524


	June 30,		March 31,
	2023		2024		Change		% Change
Unbilled revenue (included in accounts receivable, net)	$	86,818	$	241,092	$	154,274	178	%


	Balance Sheet Category	June 30, 2023		March 31, 2024
Operating lease ROU assets, net	Other assets	$	32,618	$	28,792

Operating lease liabilities, current portion	Other accrued expenses and current liabilities	$	9,787	$	9,373
Operating lease liabilities, long-term	Other long-term liabilities		23,733		20,141
Total operating lease liabilities		$	33,520	$	29,514

Weighted average remaining lease term					3.8 years
Weighted average discount rate					4.1	%


	March 31, 2024
Less than one year	$	10,344
1 – 2 years		8,894
2 – 3 years		7,754
3 – 4 years		4,230
4 – 5 years		934
Thereafter		278
		32,434
Less: imputed interest		(2,920)
Total lease liabilities	$	29,514


	Three Months Ended March 31, 2023
			Optoelectronics and
			Manufacturing		Healthcare
	Security Division		Division		Division		Corporate		Total
Acquisition-related costs	$	—	$	—	$	—	$	50	$	50
Employee termination costs		413		32		81		—		526
Facility closures/consolidation		35		—		—		—		35
Legal costs, net		45		—		226		8		279
Total	$	493	$	32	$	307	$	58	$	890


					Facility
	Acquisition-		Employee		Closure/		Legal
	Related		Termination		Consolidation		Costs and
	Costs		Costs		Cost		Settlements		Total
Balance as of June 30, 2023	$	7	$	107	$	1,609	$	656	$	2,379
Restructuring and other charges, net		444		814		815		423		2,496
Payments, adjustments and reimbursements, net		(451)		(750)		(2,082)		(622)		(3,905)
Balance as of March 31, 2024	$	—	$	171	$	342	$	457	$	970


		Weighted
		Average		Weighted-Average	Aggregate
	Number of	Exercise		Remaining Contractual	Intrinsic Value
	Options	Price		Term	(in thousands)
Outstanding at June 30, 2023	83,677	$	87.09
Granted	22,438		119.45
Exercised	(16,767)		82.90
Expired or forfeited	(4,375)		86.09
Outstanding at March 31, 2024	84,973	$	96.51	7.5 years	$	3,935
Exercisable at March 31, 2024	40,578			5.8 years	$	2,264


		Weighted-
		Average
	Shares	Fair Value
Nonvested at June 30, 2023	455,515	$	85.15
Granted	333,001		95.41
Vested	(389,042)		79.75
Forfeited	(5,253)		84.59
Nonvested at March 31, 2024	394,221	$	99.16


Beginning fair value, June 30, 2023	$	21,181
Addition of contingent earnout obligations		1,766
Foreign currency translation adjustment		(14)
Changes in fair value for contingent earnout obligations		(3,443)
Payments on contingent earnout obligations		(602)
Ending fair value, March 31, 2024	$	18,888


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2023		2024		2023		2024
Revenues (1) —by Segment:
Security division	$	178,752	$	285,960	$	491,188	$	700,564
Optoelectronics and Manufacturing division, including intersegment revenues		93,888		87,974		286,513		282,199
Healthcare division		43,911		41,493		130,994		121,130
Intersegment revenues elimination		(13,662)		(10,021)		(42,138)		(46,042)
Total	$	302,889	$	405,406	$	866,557	$	1,057,851

Income (loss) from operations —by Segment:
Security division	$	29,496	$	50,127	$	66,014	$	122,592
Optoelectronics and Manufacturing division		12,493		9,435		35,963		32,493
Healthcare division		1,787		1,564		4,819		2,157
Corporate		(10,148)		(9,733)		(29,572)		(30,832)
Intersegment eliminations		709		(30)		904		(167)
Total	$	34,337	$	51,363	$	78,128	$	126,243


	Q3		% of		Q3		% of
	Fiscal 2023		Net Revenues		Fiscal 2024		Net Revenues		$ Change		% Change
Security	$	178.8	59.0	%	$	286.0	70.6	%	$	107.2	60.0	%
Optoelectronics and Manufacturing		80.2	26.5			77.9	19.2			(2.3)	(2.9)
Healthcare		43.9	14.5			41.5	10.2			(2.4)	(5.5)
Total net revenues	$	302.9	100.0	%	$	405.4	100.0	%	$	102.5	33.8	%


	YTD Q3		% of		YTD Q3		% of
	Fiscal 2023		Net Revenues		Fiscal 2024		Net Revenues		$ Change		% Change
Security	$	491.2	56.7	%	$	700.6	66.2	%	$	209.4	42.6	%
Optoelectronics and Manufacturing		244.4	28.2			236.2	22.3			(8.2)	(3.4)
Healthcare		131.0	15.1			121.1	11.5			(9.9)	(7.6)
Total net revenues	$	866.6	100.0	%	$	1,057.9	100.0	%	$	191.3	22.1	%


Exhibit Number		Description

10.1*†		Amended and Restated Employment Agreement dated April 29, 2024 between Alan Edrick and OSI Systems, Inc.

10.2*†		Amended and Restated Employment Agreement dated April 29, 2024 between Ajay Mehra and OSI Systems, Inc.

10.3*†		Amended and Restated Employment Agreement dated April 29, 2024 between Victor Sze and OSI Systems, Inc.

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)


		EXECUTIVE
		/s/ Alan Edrick
		Alan Edrick

		OSI SYSTEMS, INC.
		/s/ Deepak Chopra
		By: Deepak Chopra, CEO


		EXECUTIVE
		/s/ Ajay Mehra
		Ajay Mehra

		OSI SYSTEMS, INC.
		/s/ Deepak Chopra
		By: Deepak Chopra, CEO


		EXECUTIVE
		/s/ Victor Sze
		Victor Sze

		OSI SYSTEMS, INC.
		/s/ Deepak Chopra
		By: Deepak Chopra, CEO


Date: April 30, 2024

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