Security and healthcare technology company OSI Systems (NASDAQ: OSIS) reported Q1 CY2026 results exceeding the market’s revenue expectations, with sales up 2% year on year to $453.2 million. The company expects the full year’s revenue to be around $1.85 billion, close to analysts’ estimates. Its non-GAAP profit of $2.60 per share was 2.3% above analysts’ consensus estimates.

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Company Overview

With security scanners deployed at airports and borders worldwide and patient monitors used in hospitals across the globe, OSI Systems (NASDAQ: OSIS) designs and manufactures specialized electronic systems for security screening, patient monitoring, and optoelectronic applications.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $1.81 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 bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, OSI Systems’s sales grew at an impressive 10.6% compounded annual growth rate over the last five years. This is a great starting point for our analysis because it shows OSI Systems’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. OSI Systems’s annualized revenue growth of 10.9% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

We can better understand 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 8.1% year-on-year growth. This segment has lagged the company’s overall sales.

This quarter, OSI Systems reported modest year-on-year revenue growth of 2% but beat Wall Street’s estimates by 1.4%.

Looking ahead, sell-side analysts expect revenue to grow 5.9% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above the sector average and suggests the market is baking in some success for its newer products and services.

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Adjusted Operating Margin

OSI Systems has managed its cost base well over the last five years. It demonstrated solid profitability for a business services business, producing an average adjusted operating margin of 13%.

Looking at the trend in its profitability, OSI Systems’s adjusted operating margin rose by 1.5 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, OSI Systems generated an adjusted operating margin profit margin of 11.7%, down 2.5 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 14.5% compounded annual growth rate over the last five years, higher than its 10.6% 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 quality to better understand the drivers of its performance. As we mentioned earlier, OSI Systems’s adjusted operating margin declined this quarter but expanded by 1.5 percentage points over the last five years. Its share count also shrank by 5.5%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For OSI Systems, its two-year annual EPS growth of 11.3% was lower than its five-year trend. This wasn’t great, but at least the company was successful in other measures of financial health.

In Q1, OSI Systems reported adjusted EPS of $2.60, up from $2.44 in the same quarter last year. This print beat analysts’ estimates by 2.3%. 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 Q1 Results

It was good to see OSI Systems narrowly top analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance was in line. Zooming out, we think this was a mixed quarter. The stock remained flat at $284.13 immediately following the results.

So do we think OSI Systems is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).