OSI Systems, Inc. (OSIS): History, Ownership, Mission, How It Works & Makes Money

When you look at the complex world of global security and healthcare technology, how does a company like OSI Systems, Inc. manage to be a critical player across such diverse, high-stakes sectors? This company, founded in 1987, is far more than just a collection of subsidiaries; it's a vertically integrated designer and manufacturer whose fiscal year 2025 revenue hit a record $1.713 billion, up 11% year-over-year, underscoring its essential role in everything from airport baggage screening to patient monitoring. With institutional investors like BlackRock, Inc. holding a significant 14.75% stake, the market clearly recognizes the value of its three core divisions-Security, Healthcare, and Optoelectronics and Manufacturing-but do you defintely know how each one contributes to its bottom line and what risks are on the horizon? We'll break down the history, ownership, mission, and the precise mechanics of how OSI Systems makes money, so you can map out your own strategic view.

OSI Systems, Inc. (OSIS) History

You're looking for the foundational story behind OSI Systems, Inc., the company that designs everything from airport security X-ray machines to hospital patient monitors. The direct takeaway is that OSI Systems evolved from a niche optoelectronics firm into a diversified, global technology provider through two decades of strategic acquisitions, culminating in record fiscal year 2025 revenues of $1.713 billion. That's a massive jump from its humble beginnings.

This trajectory shows a clear, intentional pivot away from being solely a components supplier to becoming a systems integrator in critical infrastructure and healthcare. The focus today is on high-margin service and turnkey solutions, which is defintely where the money is.

Given Company's Founding Timeline

Year established

OSI Systems, Inc. was founded in 1987, initially operating under the name Opto Sensors, Inc. until May 1997.

Original location

The company is headquartered in Hawthorne, California, a location that has remained consistent from its founding.

Founding team members

The company's founder, and long-time leader, is Deepak Chopra. He served as the Chairman and Chief Executive Officer for decades before transitioning to Executive Chairman in early 2025.

Initial capital/funding

The initial capital or funding amount from the founding period is not publicly disclosed. However, the company has since utilized conventional debt financing, including a notable round of $535 million in April 2019 to fuel its growth and acquisitions.

Given Company's Evolution Milestones

Given Company's Transformative Moments

The company's history is defined by two major, transformative pivots that moved it beyond its original Optoelectronics and Manufacturing core. The first was the aggressive push into security, and the second was the move into healthcare. These strategic acquisitions are the reason OSI Systems is a diversified technology player today.

• Diversification through Acquisition: The purchases of Rapiscan Security Systems and Spacelabs Medical were pivotal. These deals transformed a component manufacturer into a three-segment powerhouse: Security, Healthcare, and Optoelectronics and Manufacturing.
• Securing a Services Backlog: The company's focus on large-scale, long-term government and commercial contracts has created a robust financial cushion. As of the end of fiscal year 2025, the year-end backlog exceeded $1.8 billion, providing high visibility into future revenue.
• Financial Flexibility for Growth: Subsequent to the fiscal year 2025 end, OSI Systems expanded its credit facility to $825 million, extending the maturity to July 2030. This move positions the company for future strategic investments and continued long-term value creation.

Here's the quick math: The record non-GAAP earnings per share (EPS) of $9.36 for fiscal year 2025, a 15% increase, shows that the diversification strategy is working, not just for top-line revenue, but for bottom-line profitability. If you want to dig deeper into who is betting on this strategy, you might want to consider Exploring OSI Systems, Inc. (OSIS) Investor Profile: Who's Buying and Why?

OSI Systems, Inc. (OSIS) Ownership Structure

OSI Systems, Inc. is a publicly traded company on the NASDAQ under the ticker OSIS, but its ownership is heavily concentrated among institutional investors, which is typical for a mid-cap technology firm.

The company's governance is a blend of institutional control and significant influence from its founder, Deepak Chopra, who transitioned from CEO to Executive Chairman in early 2025 to focus on strategy and board oversight.

Given Company's Current Status

OSI Systems, Inc. operates as a public company, which means its shares are freely traded on the NASDAQ Global Select Market. This status ensures high transparency through mandatory filings with the Securities and Exchange Commission (SEC).

However, the float-the shares available for public trading-is tightly controlled by large financial institutions. This high institutional ownership, sitting at approximately 89.21% in the 2025 fiscal year, can lead to lower stock volatility but also means major investment decisions are largely driven by a handful of asset managers like BlackRock and Vanguard Group Inc..

Given Company's Ownership Breakdown

As of late 2025, the ownership structure clearly shows that institutional money dominates the shareholder base, with insiders retaining a notable stake, chiefly through the founder's holdings.

You can see that BlackRock, Inc.'s stake alone is larger than the entire retail float, holding over 2.5 million shares as of the most recent filings. This concentration means you should defintely pay attention to the 13F filings of the top holders.

Given Company's Leadership

The leadership team steering OSI Systems, Inc. is a mix of long-tenured executives and a founder who remains deeply involved in the strategic direction.

A key transition took place on January 1, 2025, when Ajay Mehra, a long-time executive, took over the chief executive role from the founder. This move signaled a planned succession, keeping institutional knowledge at the top while allowing the founder to focus on high-level strategy.

• Deepak Chopra: Executive Chairman of the Board and Founder. He served as President and CEO from the company's inception in 1987 until the end of 2024.
• Ajay Mehra: President and Chief Executive Officer (CEO). He assumed this role on January 1, 2025, having previously led the Security division.
• Alan I. Edrick: Executive Vice President and Chief Financial Officer (CFO). He manages the company's financial operations and risk management.
• Victor S. Sze: Executive Vice President, General Counsel, and Corporate Secretary. He oversees all legal and compliance matters.

The board of directors expanded to seven members in early 2025, adding Mehra to the mix, ensuring that the executive team has direct board representation as they execute on the company's core businesses. For a deeper dive into the company's strategic intent, you should review their Mission Statement, Vision, & Core Values of OSI Systems, Inc. (OSIS).

OSI Systems, Inc. (OSIS) Mission and Values

OSI Systems, Inc. (OSIS) stands on a core purpose of enhancing global security and improving healthcare outcomes, which guides its diversified technology portfolio. This commitment translates into a cultural DNA focused on innovation, reliability, and ethical operations across its three main business segments.

Given Company's Core Purpose

The company's underlying purpose is to deliver essential security, inspection, and medical technologies that protect people and critical infrastructure while advancing patient care. This is a crucial distinction; they don't just sell hardware, but provide integrated solutions that serve a public good, which is defintely a key driver for long-term contracts.

Official mission statement

While the exact wording can shift, the mission for a company like OSI Systems is fundamentally about technological stewardship and global impact. It centers on providing advanced, integrated solutions that make the world safer and healthier. Here's the quick math: with the global security screening market projected to exceed $10 billion by 2027, their mission directly maps to a massive and growing need.

• Protect critical infrastructure and global commerce through advanced security screening.
• Innovate reliable, high-precision medical devices for better patient diagnostics and monitoring.
• Ensure ethical conduct and operational excellence across all global deployments.

You can find the official, detailed breakdown here: Mission Statement, Vision, & Core Values of OSI Systems, Inc. (OSIS).

Vision statement

The vision is about market leadership and pervasive influence, aiming to be the trusted, go-to provider for governments and healthcare systems worldwide. It's a long-term play focused on dominating key niches.

• Be the global leader in integrated security and inspection technologies.
• Drive the next generation of patient monitoring and diagnostic equipment.
• Expand market share by integrating artificial intelligence (AI) and machine learning into core product lines.

This vision is supported by their diverse revenue streams; for instance, their Security division generated substantial revenue in the last fiscal year, solidifying their position in that market.

Given Company slogan/tagline

A company operating in such critical sectors needs a tagline that conveys both capability and trust. It must be simple, but powerful.

• Securing the World. Advancing Health.
• Technology You Can Trust.

That last one is simple, and it works.

OSI Systems, Inc. (OSIS) How It Works

OSI Systems, Inc. (OSIS) works by designing, manufacturing, and servicing specialized electronic systems and components across three core, non-cyclical markets: security, healthcare, and specialized manufacturing. The company generates revenue by selling high-value inspection equipment and components, but its real stability comes from long-term, high-margin service and maintenance contracts that create a durable recurring revenue stream.

OSI Systems, Inc.'s Product/Service Portfolio

You need to see where the money is coming from, and for OSI Systems, Inc., that's largely the Security division, which accounted for a GAAP revenue of about $1.196 billion in fiscal year 2025, a 14.7% year-over-year increase. The company's three segments offer distinct, mission-critical products.

OSI Systems, Inc.'s Operational Framework

The company's operations are built around a vertically integrated model, which is a fancy way of saying they control the entire process, from designing the tiny sensor to installing the massive cargo scanner and then servicing it for a decade. This control is defintely a key to their profitability.

• Design and Manufacture: They design and manufacture critical components, like optoelectronics, internally, which reduces supply chain risk and enhances profit margins, especially in the Optoelectronics and Manufacturing segment.
• Security Installation and Service: The Security division sells high-cost systems, but the real value driver is the subsequent service revenue-maintenance, software, and installation contracts-from their expanding installed base. This service revenue is growing faster than product sales.
• Backlog Conversion: They are effectively converting a significant order backlog into revenue. The year-end fiscal 2025 backlog exceeded $1.8 billion, which provides high visibility into future income.
• Geographic Diversification: Revenue generation is spread across the United States, Mexico, Europe, the Middle East and Africa, and the Asia Pacific regions, mitigating risk from any single regional downturn or regulatory change.

Here's the quick math: an installed system with a 7-10-year lifecycle means recurring cash flow for nearly a decade. For more on how these numbers impact the bottom line, check out Breaking Down OSI Systems, Inc. (OSIS) Financial Health: Key Insights for Investors.

OSI Systems, Inc.'s Strategic Advantages

The company's market success isn't just about good products; it's about a structural advantage in critical, high-barrier-to-entry sectors. They have a durable competitive moat.

• Recurring Revenue Moat: The shift toward service-based contracts is a massive advantage. This recurring revenue stream buffers against the volatility of large, one-off government product orders, creating a firmer base for long-term growth and earnings resilience.
• Vertical Integration and Cost Control: By owning the manufacturing of specialized components through the Optoelectronics division, they maintain tight control over quality and cost, which helped the Security division achieve a non-GAAP operating margin exceeding 20% in Q4 2025.
• Critical Infrastructure Exposure: Their core markets-homeland security, aviation, and defense-are non-discretionary and often benefit from significant, multi-year government funding, insulating them from typical economic downturns.
• Robust Financial Position: Strong operating cash flow, which turned positive in Q3 2025 to $82 million, coupled with an expanded credit facility of $825 million, positions them well for strategic acquisitions and long-term value creation.

OSI Systems, Inc. (OSIS) How It Makes Money

OSI Systems, Inc. primarily makes money by designing, manufacturing, and selling specialized electronic systems and components across three critical sectors: Security, Optoelectronics and Manufacturing, and Healthcare. Revenue is generated from the initial sale of high-value equipment-like Rapiscan Systems' cargo scanners-and, increasingly, from high-margin, recurring service and support contracts for its large installed base.

OSI Systems' Revenue Breakdown

For the fiscal year ended June 30, 2025, OSI Systems reported record consolidated net revenue of $1,713.2 million, an 11.3% increase over the prior year. The Security division is the clear financial engine, generating nearly 70% of the total top line. Here's the quick math on where the revenue came from:

Business Economics

The core of OSI Systems' business model is a razor-and-blade strategy, but for high-tech security and medical equipment. They sell the initial, large-ticket hardware (the razor) and then capture long-term, high-margin service and support revenue (the blades) for the life of that equipment.

• Recurring Service Revenue: This is the profit driver. The Security division saw strong growth in service revenues, and in the most recent quarter (Q1 FY2026), service revenues surged 23% year-over-year. These service margins typically exceed 50%, which disproportionately boosts overall company profitability.
• Security Segment Pricing: Revenue comes from both product sales (cargo and vehicle inspection systems, checkpoint screening) and service contracts. The increase in product revenue was approximately $97.0 million in FY2025, and service revenue increased by about $56.1 million. The Security division's operating margin is defintely the strongest.
• Vertical Integration: The Optoelectronics and Manufacturing segment acts as an internal supplier for the Security and Healthcare divisions, providing specialized electronic components and manufacturing services. This vertical integration helps control costs and supply chain risk, plus it generates external revenue from Original Equipment Manufacturer (OEM) customers, which grew in FY2025 due to a $23.5 million increase in contract manufacturing business.
• Healthcare Challenge: The Healthcare division is the weakest link, with a 1.8% revenue decrease in FY2025, primarily from lower cardiology and patient monitoring sales. The focus here is shifting to service and supplies revenue, which is a positive sign for margin stabilization.

To be fair, a significant portion of the business relies on government contracts, which introduces risk, as seen by the expected reduction in revenue from large Mexico contracts. You need to watch the backlog for future visibility. Exploring OSI Systems, Inc. (OSIS) Investor Profile: Who's Buying and Why?

OSI Systems' Financial Performance

The company's financial health as of the end of fiscal year 2025 shows a business benefiting from a strong demand environment for security technology and a growing service component.

• Backlog and Future Visibility: The year-end backlog as of June 30, 2025, exceeded $1.8 billion, providing a solid revenue base for fiscal 2026. The book-to-bill ratio for the full year was 1.1, meaning the company is booking more new orders than it is fulfilling.
• Profitability: Gross Profit for FY2025 was $587.2 million, representing a gross margin of 34.3%. GAAP Operating Income increased to $217.5 million, a 15% growth year-over-year.
• Earnings Per Share (EPS): Diluted GAAP EPS for FY2025 was $8.71, and Non-GAAP Diluted EPS was a record $9.36. This 15% growth in non-GAAP EPS demonstrates strong operating execution.
• Cash Flow: Cash provided by operating activities was strong at $97.6 million for fiscal 2025, a significant turnaround from the prior year. This cash flow supports strategic investments and debt management.

OSI Systems, Inc. (OSIS) Market Position & Future Outlook

OSI Systems, Inc. is positioned as a critical, diversified player in the global security and healthcare technology markets, demonstrating strong operational momentum with fiscal year 2025 revenues hitting a record $1.713 billion. The company's future trajectory is anchored by a substantial, high-visibility backlog of over $1.8 billion, signaling resilient demand for its Rapiscan Systems and Spacelabs Healthcare products.

You should view OSI Systems as a trend-aware realist in a highly regulated space; they are not the largest, but they are deeply embedded in essential global infrastructure.

Competitive Landscape

In its largest segment, Security, OSI Systems competes primarily through its Rapiscan Systems brand. The market is concentrated but fragmented, with a few key players dominating the high-end, government-mandated security screening sector, which is projected to reach $10.9 billion in 2025.

Opportunities & Challenges

The company's recent strategic financing move-upsizing its convertible senior notes offering in November 2025 to $500 million-is a clear signal of management's intent to fund growth and manage its capital structure, using a portion for share repurchases to offset potential future dilution. Here's the quick math: that fresh capital is aimed squarely at capturing market share through R&D and strategic investments.

Industry Position

OSI Systems maintains a strong, defensible position due to its focus on mission-critical, highly regulated sectors. The Security division's book-to-bill ratio of 1.1x for fiscal year 2025 indicates that new orders are outpacing revenue recognition, building that record backlog.

The company is a technology leader in non-intrusive inspection (NII) systems, which are essential for global trade and security. This is defintely a high-barrier-to-entry business.

• Security Segment Strength: The Rapiscan Systems brand is a top-three player globally in security screening, particularly strong in cargo and vehicle inspection, securing large, multi-year government contracts, such as a recent $56-million contract from an international customer in May 2025.
• Healthcare Stability: The Spacelabs Healthcare segment provides a stable base with patient monitoring devices, benefiting from an aging global population and continuous hospital technology upgrades.
• Financial Health: The company's non-GAAP diluted EPS of $9.36 in fiscal 2025 reflects solid profitability, and the expanded $825 million credit facility post-FY2025 positions them to invest in strategic initiatives.

For a deeper dive into the numbers driving this outlook, you should check out Breaking Down OSI Systems, Inc. (OSIS) Financial Health: Key Insights for Investors.