OSI Systems (OSIS) Morgan Stanley Technology, Media & Telecom Conference 2026 summary

Business overview and segment performance

• Operates in three divisions: security (over two-thirds of revenue), optoelectronics (about 25%), and healthcare (under 10%).

• Security division, branded as Rapiscan, is the largest global security detection provider, focusing on cargo, vehicle, and aviation inspection.

• Optoelectronics supplies sensors and components to Fortune 500 firms and internally, enhancing gross margins through vertical integration.

• Healthcare sells patient monitors and cardiology products, with about half of revenue recurring from services and supplies.

• Opto division has seen double-digit growth, benefiting from global manufacturing outside China.

Security division growth and market dynamics

• Security business has grown significantly, especially in cargo and vehicle inspection, now holding over 50% market share in that segment.

• Recurring revenue models, including Security as a Service and long-term contracts, are expanding, with recurring revenue expected to rise from 30% to 40% over time.

• Proprietary Certscan software differentiates offerings and has driven major contract wins, such as the $500M Mexico deal.

• Global conflicts and increased government funding, such as the One Big Beautiful Bill and Golden Dome initiatives, are providing strong tailwinds.

• Product replacement cycles in aviation and cargo offer future growth, with new procurement opportunities expected in the U.S. in coming years.

Geographic and customer highlights

• Major contracts in Mexico totaled $800M, driving a spike in backlog and revenues, with continued strong international sales offsetting tough comps.

• Growing installed base is increasing high-margin recurring service revenues, especially as products roll off warranty.

• SaaS and turnkey models are gaining traction, particularly with customers lacking upfront capital or operational expertise.