OSI Systems (OSIS) Posted Record Cash Flow and Backlog but Revenue Missed Estimates

OSI Systems (OSIS) reported record operating cash flow and backlog in fiscal year 2026, but its fourth-quarter revenue fell 4% to $484.1 million, $45.6 million below the $529.7 million consensus estimate. Full-year revenue also missed estimates at $1.786 billion, $39 million below the company's prior guidance. EPS for the quarter was $3.78, in line with the $3.77 consensus estimate.

Shares fell following the revenue miss, Middle Eastern delivery delays, and the company's fiscal 2027 guidance. The company's backlog increased to $1.9 billion from $1.8 billion, though the exact conversion of these orders remains unclear. Revenue from the Security division fell 7.4% to $339.7 million, despite healthy bookings. The company expects 2027 revenue to range between $1.875 billion and $1.93 billion, with a non-GAAP diluted EPS between $11.13 and $11.49, indicating a 7.5% to 11% growth.

The company's debt increased to $1.001 billion, with net debt at $641.2 million after subtracting $359.8 million in cash. OSI Systems remains a constructive investment if the delayed Security revenue shifts rather than disappears, but the quarterly revenue miss, long backlog window, higher net debt, and working-capital contributions to cash flow are factors that explain why record headline metrics did not eliminate execution risk.