OSI Systems (OSIS) Rides on Solid Portfolio & Order Wins
OSI Systems OSIS is benefiting from continuing order wins driven by its robust portfolio of security and healthcare solutions.
Markedly, the company’s Security division recently won a contract worth roughly $31 million from an international customer to provide multiple units of its Eagle M60 mobile high-energy X-ray cargo and vehicle-inspection system.
Earlier this month, the company’s Security division received a contract worth $3 million from the DHL Hub Leipzig GmbH to provide the Rapiscan RTT110 along with multiple Rapiscan Orion 927DX’s for the screening of packages and parcels in an air-cargo environment.
In July, the Commonwealth Government of Australia, represented through the Department of Agriculture, Water and the Environment, awarded a contract worth $5 million to OSI’s Security division. The agreement relates to the supply of Rapiscan RTT 110 hold baggage-screening systems and the development and delivery of software algorithms for the automated detection of biosecurity-risk items.
Coronavirus Hurts Security Division Growth
Similar to its Zacks Electronics - Miscellaneous Components peers Universal Display OLED, TE Connectivity TEL and Littelfuse LFUS, OSI System’s fourth-quarter fiscal 2020 top line was hurt by the coronavirus outbreak. The company’s revenues declined 10.2% year over year to $277 million.
Markedly, Universal Display and Littelfuse’s second-quarter 2020 revenues declined 50.2% and 22.8%, respectively. TE Connectivity witnessed 24.8% year-over-year decline in third-quarter fiscal 2020 revenues.
Notably, in fourth-quarter fiscal 2020, OSI’s Security division accounted for 59.1% of revenues. Although revenues decreased 16.3% year over year to $163.6 million, primarily due to the coronavirus-led downturn in airport traffic, OSI received orders worth roughly $60 million from a U.S. government customer to provide several platforms of cargo-inspection systems and solutions.
Nevertheless, growing clout of the company’s Rapiscan RTT 110 and Eagle M60 are expected to generate incremental revenues. This, in turn, will boost the Security division’s top line in the long haul. However, management expects the Security division to continue witnessing revenue slowdown in the first quarter of fiscal 2021 due to the negative impact of the coronavirus outbreak.
Healthcare Solutions Gaining Traction
OSI’s healthcare solutions, particularly related to patient monitoring, are gaining traction as they are assisting hospitals to provide value-based care. Notably, in the fourth quarter Healthcare-division revenues increased 15.4% year over year to $57.5 million and accounted for 20% of net revenues.
Markedly, OSI acquired SafeNSound, an innovative cloud-based healthcare-solution provider in the last-reported quarter.
Earlier this month, OSI’s Spacelabs Healthcare received an order valued at roughly $4 million to provide patient-monitoring solutions and related accessories to a U.S.-based hospital. The company expects to install its Xhibit Central Stations with XTR Telemetry, Qube bedside patient monitors, and SafeNSound patient-management software.
Further, OSI’s Optoelectronics and Manufacturing division received orders for roughly $6 million to provide electronic sub-assemblies for a leading information security-technology provider OEM.
Although coronavirus is expected to hurt OSI’s top-line growth in the near term, robust demand for the Security and Healthcare solutions are expected to drive the top line in the long haul.
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