OSI Systems' second quarter revenues increase 11% to $188 million

OSI Systems, Inc. (NASDAQ: OSIS-E), a vertically integrated provider of solutions in Security, Healthcare, and specialized electronics, today announced financial results for the second quarter ended December 31, 2011.

Deepak Chopra, OSI Systems' Chairman and CEO, stated, "We are very pleased to announce outstanding financial results for our second quarter. Our success was evident throughout all of OSI as each of our divisions reported both sales and earnings growth leading to record sales and earnings in our second quarter. In addition to the impressive financial performance during the quarter, perhaps our bigger news is the $400 million, six-year security agreement with the Servicio de Administración Tributaria ("SAT"), Mexico's tax and customs authority, awarded shortly after the quarter ended. This turnkey screening services agreement will have a profound impact on our business and our ability to enhance shareholder value."

The Company reported revenues of $188 million for the second quarter of fiscal 2012, an increase of 11% as compared to the same period a year ago. Net income for the second quarter of fiscal 2012 was $12.3 million, or $0.61 per diluted share, compared to net income of $9.2 million, or $0.47 per diluted share, for the second quarter of fiscal 2011.

For the six months ended December 31, 2011, the Company reported revenues of $349.3 million, an increase of 17% as compared to the same period a year ago. Net income for the six months ended December 31, 2011 was $17.1 million, or $0.85 per diluted share, compared to net income of $12.6 million, or $0.65 per diluted share, for the six months ended December 31, 2010.

As of December 31, 2011, the Company's backlog was $377 million compared to $304 million as of June 30, 2011, an increase of 24%.

Mr. Chopra continued, "During the second quarter our Security division continued to see excellent growth as revenues increased 16% to a record $89 million. The Security division has now had growth of at least 15% in four of the past five quarters. Our strong backlog at quarter end, which does not include the $400 million turnkey award, and a robust opportunity pipeline, provide excellent visibility into continued strong performance in this division."

Mr. Chopra added, "Our Healthcare division generated record profits during the quarter as operating income increased 47% on revenue growth of 6%. We saw an improved U.S. market with a positive response to our recent new product offerings. This growth in our most profitable region coupled with the impact of our cost reduction initiatives implemented over the past several years led to second quarter operating income of $8.3 million and an operating margin of 14%, both of which are records for our Healthcare division. In addition, newly established long-term contracts with major healthcare Group Purchasing Organizations (GPO's) are expected to contribute to continued growth in the U.S. market."

Alan Edrick, OSI System's Executive Vice President and CFO, stated, "Our second quarter results continue the strong momentum demonstrated consistently over the past few years. The significant increase in profit in our Healthcare division highlights the substantial leverage of this business. In addition, we are very excited by the prospects of the Mexico turnkey screening solutions award which is expected to provide a substantial recurring revenue and profit stream to OSI."

Fiscal Year 2012 Outlook

Subject to the risk factors detailed in the Safe Harbor section of this press release, the Company is raising its annual revenue guidance from $740 million - $760 million to a range of $750 million - $770 million. In addition, the Company is raising its fiscal 2012 earnings guidance and expects earnings per diluted share to increase at a rate of 25% - 32% to a range of $2.30 to $2.42, excluding the impact of restructuring and other non-recurring charges. In addition, the impact of the security agreement with SAT is not considered in the Company's guidance pending further clarity on expected timing.