Security and healthcare technology company OSI Systems (NASDAQ:OSIS) reported calendar Q3 2026 (fiscal Q1 2027) results topping the market's revenue expectations , with revenue up 4.9% year on year to $403.5 million. The company expects the full year's revenue to be around $1.90 billion, close to analysts' consensus estimates. Its non-GAAP profit of $1.66 per share was 0.8% above analysts' consensus estimates.
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OSI Systems (OSIS) Q3 CY2026 highlights:
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Revenue$403.5 million vs S&P analysts' consensus estimates of $393.3 million (4.9% year-on-year growth, 2.6% beat)
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Adjusted EPS$1.66 vs S&P analysts' consensus estimates of $1.65 (0.8% beat)
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Revenue guidanceThe company reconfirmed its revenue guidance for the full year of $1.90 billion at the midpoint
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Adjusted EPS guidanceManagement raised its full-year adjusted EPS guidance to $11.46 at the midpoint, a 1.3% increase
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Operating margin8.3%, in line with the same quarter last year
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Backlog$2.1 billion at quarter end
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Market capitalization$3.20 billion
Ajay Mehra, OSI Systems' President and Chief Executive Officer, stated, "We are pleased to begin fiscal 2027 with record first quarter revenues and earnings per share, led by the performance of our Security and Optoelectronics and Manufacturing divisions. Bookings of $583 million represented a book-to-bill ratio of 1.4 in the quarter, and backlog increased to a record of $2.1 billion from $1.9 billion as of June 30, 2026, providing meaningful visibility into future opportunities. We remain committed to disciplined execution and innovation, and converting our expanding opportunity pipeline into long-term growth."
Revenue growth
A company's long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $1.80 billion in revenue over the past 12 months, OSI Systems is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the positive side, it can still generate high growth rates because it's working from a smaller revenue base.
OSI Systems grew its revenue at an impressive 9% compounded annual growth rate over the last five years. This shows demand for OSI Systems's products and services was higher than at many business services companies.
Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. OSI Systems's annualized revenue growth of 6.1% over the last two years is below its five-year trend, but the results were still respectable.
We can dig further into the company's revenue dynamics by analyzing its most important segment, Security. Over the last two years, OSI Systems's Security revenue (inspection systems) averaged 6.2% year-on-year growth.
This quarter, OSI Systems reported modest year-on-year revenue growth of 4.9% but beat Wall Street's consensus estimates by 2.6%.
Looking ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months, according to S&P, similar to its two-year rate. This projection is above the sector average and indicates its newer products and services will help maintain its recent top-line performance.
Adjusted operating margin
Adjusted operating margin is one of the best measures of profitability because it shows how much a company earns after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to provide a clearer picture of normalized profits.
OSI Systems has managed its cost base well over the last five years. It demonstrated solid profitability for a business services company, producing an average adjusted operating margin of 13.2%.
Looking at the trend in its profitability, OSI Systems's adjusted operating margin rose by 2.1 percentage points over the last five years, as its revenue growth gave it operating leverage.
This quarter, OSI Systems generated an adjusted operating margin of 8.3%, down 2 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings per share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable.
OSI Systems's EPS grew at a 14.4% compounded annual growth rate over the last five years, higher than its 9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into OSI Systems's earnings to better understand the drivers of its performance. As we mentioned earlier, OSI Systems's adjusted operating margin declined this quarter but expanded by 2.1 percentage points over the last five years. Its share count also shrank by 11.2%, and these factors together are positive signs for shareholders because improving profitability and share buybacks boost EPS growth relative to revenue growth.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For OSI Systems, its two-year annual EPS growth of 12% was lower than its five-year trend. Even so, its growth was good, and an acceleration would be welcome.
In Q3, OSI Systems reported adjusted EPS of $1.66, up from $1.42 in the same quarter last year. This result was close to analysts' consensus estimates. We also like to analyze expected EPS growth based on Wall Street analysts' consensus projections, but there is insufficient data.
Key takeaways from OSI Systems's Q3 results
OSI Systems' quarter had some key positives: revenue beat analysts' consensus estimates, and full-year EPS guidance came in narrowly above Wall Street's consensus. Full-year revenue guidance, however, was in line with expectations. Shares rose 2.7% to $214.21 immediately after the results.
The latest quarter is just one part of assessing longer-term business quality. Quality, combined with valuation, can help determine whether the stock is a buy. Read our full research report here for free .
