What changed in this filing

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Item 1. Financial Statements

2026-01-29 compared with 2025-10-30 · 230 added, 117 removed, 490 unchanged (41% of the section changed)

4 unchanged sentences

(amounts in thousands, except share amounts and par value)

September 30,

CURRENT ASSETS:

24 unchanged sentences

Common stock, $ 0.001 par value— 100,000,000 shares authorized;

issued and outstanding, 16,794,399 shares at June 30, 2025 and 16,977,595 shares at September 30, 2025

issued and outstanding, 16,794,399 shares at June 30, 2025 and 16,451,106 shares at December 31, 2025

Retained earnings

7 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended September 30,

Three Months Ended December 31,

Six Months Ended December 31,

Net revenues:

5 unchanged sentences

Research and development

Restructuring and other charges

Impairment, restructuring and other charges

Total operating expenses

10 unchanged sentences

(amounts in thousands)

Three Months Ended September 30,

Three Months Ended December 31,

Six Months Ended December 31,

Other comprehensive income (loss):

Foreign currency translation adjustment, net of tax

Net unrealized loss on derivatives, net of tax

Net unrealized gain (loss) on derivatives, net of tax

Other, net of tax

Other comprehensive loss

Other comprehensive income (loss)

Comprehensive income

4 unchanged sentences

(amounts in thousands, except share data)

Three Months Ended September 30, 2024

Three Months Ended December 31, 2024

Comprehensive

Balance—September 30, 2024

Exercise of stock options

Vesting of RSUs

Stock-based compensation expense

Taxes paid related to net share settlement of equity awards

Other comprehensive loss

Balance—December 31, 2024

Three Months Ended December 31, 2025

Comprehensive

Balance—September 30, 2025

Exercise of stock options

Vesting of RSUs

Stock-based compensation expense

Repurchase of common stock

Taxes paid related to net share settlement of equity awards

Other comprehensive income

Balance—December 31, 2025

OSI SYSTEMS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(amounts in thousands, except share data)

Six Months Ended December 31, 2024

Comprehensive

Balance—June 30, 2024

6 unchanged sentences

Other comprehensive loss

Balance—September 30, 2024

Three Months Ended September 30, 2025

Balance—December 31, 2024

Six Months Ended December 31, 2025

Comprehensive

4 unchanged sentences

Stock-based compensation expense

Repurchase of common stock

Taxes paid related to net share settlement of equity awards

Other comprehensive loss

Balance—September 30, 2025

Other comprehensive income

Balance—December 31, 2025

OSI SYSTEMS, INC.

2 unchanged sentences

(amounts in thousands)

Three Months Ended September 30,

Six Months Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of effects from acquisitions:

Adjustments to reconcile net income to net cash provided by operating activities, net of effects from acquisitions:

Depreciation and amortization

10 unchanged sentences

Deferred revenue

Net cash provided by (used in) operating activities

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

1 unchanged sentence

Proceeds from sale of property and equipment

Proceeds from maturities of certificates of deposit

Acquisition of business, net of cash acquired

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Net borrowings (repayments) on bank lines of credit

Net repayments on bank lines of credit

Proceeds from long-term debt

6 unchanged sentences

Effect of exchange rate changes on cash

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents—beginning of period

15 unchanged sentences

These unaudited condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 filed with the SEC.

The results of operations for the three months ended September 30, 2025 are not necessarily indicative of the operating results to be expected for the full 2026 fiscal year or any future periods.

The results of operations for the three and six months ended December 31, 2025 are not necessarily indicative of the operating results to be expected for the full 2026 fiscal year or any future periods.

Use of Estimates

7 unchanged sentences

Potential common shares consist of the shares issuable upon the exercise of stock options and restricted stock unit awards under the treasury stock method.

The underlying equity component of the 2.25 % convertible senior notes due 2029 (the “2029 Notes”) discussed in Note 8 to the condensed consolidated financial statements will have a net impact on diluted earnings per share when the average price of our common stock exceeds the conversion price of $ 191.98 because the principal amount of the 2029 Notes will be settled in cash upon conversion.

There was a dilutive effect of the 2029 Notes as set forth in the table below for the three months ended September 30, 2025.

The underlying equity component of the 2.25 % convertible senior notes due 2029 (the “2029 Notes”) and the 0.50 % convertible senior notes due 2031 (the “2031 Notes”) discussed in Note 8 to the condensed consolidated financial statements will have a net impact on diluted earnings per share when the average price of our common stock exceeds the conversion price of $ 191.98 for the 2029 Notes and $ 353.82 for the 2031 Notes because the principal amounts of the respective convertible senior notes will be settled in cash upon conversion.

There was a dilutive effect of the 2029 Notes as set forth in the table below for the three and six months ended December 31, 2025.

There was no dilutive impact of the 2031 Notes.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

Three Months Ended September 30,

Three Months Ended December 31,

Six Months Ended December 31,

Net income available to common stockholders

8 unchanged sentences

We consider all highly liquid investments with maturities of three months or less as of the acquisition date to be cash equivalents.

Our cash and cash equivalents totaled $ 124.4 million at September 30, 2025.

Our cash and cash equivalents totaled $ 336.7 million at December 31, 2025.

Of this amount, approximately 32 % was held by our foreign subsidiaries and subject to repatriation tax considerations.

These foreign funds were held primarily by our subsidiaries in India, the United Kingdom, Singapore, and Canada and to a lesser extent Malaysia, Australia, and Indonesia, among other countries.

These foreign funds were held primarily by our subsidiaries in the United Kingdom, India, Singapore, Canada, and Mexico and to a lesser extent Malaysia, Albania, and Germany, among other countries.

We have cash holdings in financial institutions that exceed insured limits for such financial institutions;

4 unchanged sentences

The carrying values of our long-term debt instruments are considered to approximate their fair values because the interest rates of these instruments are variable or comparable to current rates for financing available to us.

The fair values of our foreign currency forward contracts were not significant as of June 30, 2025 or as of September 30, 2025.

The fair values of our foreign currency forward contracts were not significant as of June 30, 2025 or as of December 31, 2025.

Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

5 unchanged sentences

June 30, 2025

September 30, 2025

December 31, 2025

Assets—Insurance company contracts

5 unchanged sentences

Our foreign currency forward contracts are utilized to partially mitigate certain balance sheet exposures or used as a net investment hedge to protect against potential changes resulting from short-term foreign currency fluctuations.

These contracts have original maturities of up to three months.

These foreign currency forward contracts have original maturities of up to three months.

We also manage our risk to changes in interest rates using derivative instruments.

1 unchanged sentence

We do not use hedging instruments for speculative purposes.

The net gains or losses from our foreign currency forward contracts, which are not designated as hedge instruments, are reported in the consolidated statements of operations, and the amounts reported for the three months ended September 30, 2024 and 2025 were not significant.

The net gains or losses from our foreign currency forward contracts, which are not designated as hedge instruments, are reported in the consolidated statements of operations, and the amounts reported for the three and six months ended December 31, 2024 and 2025 were not significant.

The fair value of our foreign currency forward contracts is estimated using a standard valuation model and market-based observable inputs over the contractual term.

Unrealized gains are recognized as assets and unrealized losses are recognized as liabilities.

As of June 30, 2025 and September 30, 2025, we held foreign currency forward contracts with notional amounts totaling $ 99.9 million and $ 113.4 million, respectively.

Unrealized gains and losses from our foreign currency forward contracts as of June 30, 2025 and September 30, 2025 were not significant.

As of June 30, 2025 and December 31, 2025, we held foreign currency forward contracts with notional amounts totaling $ 99.9 million and $ 160.1 million, respectively.

Unrealized gains and losses from our foreign currency forward contracts as of June 30, 2025 and December 31, 2025 were not significant.

Our interest rate swap agreement was entered into to improve the predictability of cash flows from interest payments related to our variable, Secured Overnight Financing Rate (“SOFR”)-based debt.

2 unchanged sentences

A qualitative and quantitative assessment of the interest rate swap hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate that the hedge may no longer be highly effective.

As of June 30, 2025 and September 30, 2025, the notional amount of the derivative instruments designated as an interest rate swap hedge was $ 175 million.

The fair value of the interest rate swap agreement as of June 30, 2025 and September 30, 2025 is recorded in Other assets within the consolidated balance sheet.

As of June 30, 2025 and December 31, 2025, the notional amount of the derivative instruments designated as an interest rate swap hedge was $ 175 million.

The fair value of the interest rate swap agreement as of June 30, 2025 and December 31, 2025 is recorded in Other assets within the consolidated balance sheet.

The effect of the cash flow hedges on other comprehensive income (loss) and earnings for the periods presented was as follows:

Three Months Ended September 30,

Three Months Ended December 31,

Six Months Ended December 31,

Total interest and other expense, net presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded

Loss recognized in other comprehensive income (loss), net of tax

Benefit reclassified from accumulated other comprehensive loss to interest expense, net

Gain (loss) recognized in other comprehensive income (loss), net of tax

Benefit reclassified from accumulated other comprehensive income (loss) to interest expense, net

Recent Accounting Pronouncements

1 unchanged sentence

Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our Consolidated Financial Statements upon adoption.

There were no new pronouncements adopted in the first quarter of fiscal year 2026.

There were no new pronouncements adopted in the second quarter of fiscal year 2026.

Accounting Guidance Not Yet Adopted

In December 2023, the FASB issued Accounting Standards Update 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”), which provides for additional disclosures primarily related to income tax rate reconciliations and income taxes paid.

In December 2023, the FASB issued Accounting Standards Update 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”), which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid.

ASU 2023-09 requires entities to annually disclose the income tax rate reconciliation using both amounts and percentages, considering several categories of reconciling items, including state and local income taxes, foreign tax effects, tax credits and nontaxable or nondeductible items, among others.

21 unchanged sentences

In September 2024, we (through our Security division) acquired 100 % of the shares of common stock of a privately held provider of critical military, space and surveillance solutions to expand our customer base and offer additional products and services for existing customers, for approximately $ 76.0 million, plus up to $ 24.0 million in potential contingent consideration.

We paid $ 75.5 million in cash at the closing of the transaction and recorded a holdback liability of $ 0.5 million which is expected to be released in 2030.

We paid $ 75.5 million in cash at the closing of the transaction and recorded a holdback liability of $ 0.5 million which is scheduled to be paid in 2030.

The cash paid for this acquisition was financed with borrowings from our credit facility.

7 unchanged sentences

The measurement period adjustments did not have a significant impact on the consolidated statement of operations.

The measurement period ended in September 2025, accordingly no further purchase price adjustments have been recorded during the three months ended December 31, 2025.

In April 2025, we (through our Security Division) acquired a privately held provider of engineering and structural component services for approximately $ 1.3 million, plus up to $ 0.9 million in potential contingent consideration.

3 unchanged sentences

The following tables set forth details of selected balance sheet accounts (in thousands):

September 30,

Accounts receivable, net

1 unchanged sentence

Less allowance for doubtful accounts

September 30,

Raw materials

1 unchanged sentence

Finished goods

September 30,

Property and equipment, net

8 unchanged sentences

Property and equipment, net

Depreciation and amortization expense for property and equipment was $ 6.7 million and $ 5.4 million, respectively, for the three months ended September 30, 2024 and 2025.

Depreciation and amortization expense for property and equipment was $ 5.0 million and $ 5.2 million for the three months ended December 31, 2024 and 2025, respectively, and $ 11.7 million and $ 10.6 million for the six months ended December 31, 2024 and 2025, respectively.

Goodwill and Intangible Assets

The changes in the carrying value of goodwill by segment for the three-month period ended September 30, 2025 were as follows (in thousands):

The changes in the carrying value of goodwill by segment for the six-month period ended December 31, 2025 were as follows (in thousands):

Optoelectronics

3 unchanged sentences

Foreign currency translation adjustment

Balance as of September 30, 2025

Balance as of December 31, 2025

Intangible assets consisted of the following (in thousands):

June 30, 2025

September 30, 2025

December 31, 2025

Amortizable assets:

5 unchanged sentences

Total intangible assets

Amortization expense related to intangible assets was $ 4.8 million and $ 4.9 million for the three months ended September 30, 2024 and 2025, respectively.

At September 30, 2025, the estimated future amortization expense for amortizable intangible assets was as follows (in thousands):

Amortization expense related to intangible assets was $ 5.6 million and $ 4.4 million for the three months ended December 31, 2024 and 2025, respectively.

Amortization expense related to intangible assets was $ 10.4 million and $ 9.2 million for the six month ended December 31, 2024 and 2025, respectively.

At December 31, 2025, the estimated future amortization expense for amortizable intangible assets was as follows (in thousands):

2026 (remaining 6 months)

4 unchanged sentences

Amortizable assets that have not yet begun to be amortized are included in Thereafter in the table above.

For each of the three month periods ended September 30, 2024 and 2025, we capitalized software development costs of $ 4.2 million.

For the three months ended December 31, 2024 and 2025, we capitalized software development costs of $ 4.6 million in each of the respective periods.

For the six months ended December 31, 2024 and 2025, we capitalized software development costs in the amounts of $ 8.8 million and $ 8.9 million, respectively.

Contract Assets and Liabilities

7 unchanged sentences

We recognize these contract liabilities as sales after all revenue recognition criteria are met.

The table below shows the balance of contract assets and liabilities as of June 30, 2025 and September 30, 2025, including the change between such dates.

The table below shows the balance of contract assets and liabilities as of June 30, 2025 and December 31, 2025, including the change between such dates.

There were no substantial non-current contract assets for the periods presented.

Contract Assets (in thousands)

September 30,

Unbilled revenue (included in accounts receivable, net)

Contract Liabilities (in thousands)

September 30,

Advances from customers

2 unchanged sentences

Contract Assets.

Contract assets decreased by approximately $ 59.3 million primarily due to achievement of certain milestones in our Security division giving us the right to invoice customers.

Contract assets decreased $ 48.0 million primarily due to achievement of certain contractual milestones in our Security division giving us the right to invoice customers.

Contract Liabilities .

Advances from customers decreased $ 4.7 million primarily due to application of certain amounts to customer invoices during the period.

Total deferred revenue increased $ 17.8 million primarily due to service contracts which allow us to collect payment prior to performance of these obligations.

Remaining Performance Obligations .

Remaining performance obligations related to ASC 606 represent the portion of the transaction price allocated to performance obligations under an original contract with a term greater than one year which are fully or partially unsatisfied at the end of the period.

As of September 30, 2025, the portion of the transaction price allocated to remaining performance obligations was approximately $ 875.6 million.

As of December 31, 2025, the portion of the transaction price allocated to remaining performance obligations was approximately $ 625.3 million.

We expect to recognize revenue on approximately 47 % of the remaining performance obligations over the next 12 months , and the remainder is expected to be recognized thereafter.

During the three months ended September 30, 2025, we recognized revenue of $ 36.7 million from contract liabilities existing at the beginning of the period.

During the six months ended December 31, 2025, we recognized revenue of $ 56.9 million from contract liabilities existing at the beginning of the period.

Practical Expedients.

3 unchanged sentences

The components of operating lease expense were as follows (in thousands):

Three Months Ended September 30,

Three Months Ended December 31,

Six Months Ended December 31,

Operating lease cost

4 unchanged sentences

June 30, 2025

September 30, 2025

December 31, 2025

Operating lease right of use (“ROU”) assets, net

7 unchanged sentences

Supplemental cash flow information related to operating leases was as follows (in thousands):

Three Months Ended September 30,

Six Months Ended December 31,

Cash paid for operating lease liabilities

ROU assets obtained in exchange for new lease obligations

Maturities of operating lease liabilities at September 30, 2025 were as follows (in thousands):

September 30, 2025

Maturities of operating lease liabilities at December 31, 2025 were as follows (in thousands):

December 31, 2025

Less than one year

1 unchanged sentence

Total lease liabilities

Restructuring and Other Charges

Impairment, Restructuring and Other Charges

We endeavor to align our global capacity and infrastructure with demand by our customers and to effectively integrate acquisitions and thereby improve our operational efficiency.

During the three months ended September 30, 2025, we recognized $ 2.7 million in restructuring and other charges, which included $ 2.4 million primarily for non-recurring charges in the Security and Healthcare divisions and $ 0.3 million for employee terminations.

During the three months ended September 30, 2024, we recognized $ 1.2 million in restructuring and other charges, which included $ 0.6 million in employee terminations, $ 0.2 million for facility closure costs for operational efficiency activities, and $ 0.4 million in acquisition related costs.

The following tables summarize restructuring and other charges for the periods set forth below (in thousands):

Three Months Ended September 30, 2024

During the three months ended December 31, 2025, we recognized $ 2.9 million in impairment, restructuring and other charges, which included $ 1.0 million for impairment of assets, $ 0.7 million for employee terminations and $ 1.2 million for non-recurring business unit modifications in our Healthcare division.

During the six months ended December 31, 2025, we recognized $ 5.6 million in impairment, restructuring and other charges, which included $ 1.0 million for impairment of assets, $ 1.1 million for employee terminations, $ 1.3 million for non-recurring business unit modifications in our Healthcare division, and $ 2.2 million of non-recurring charges in our Security division.

During the three months ended December 31, 2024, we recognized $ 0.2 million in impairment, restructuring and other charges primarily for acquisition-related costs.

During the six months ended December 31, 2024, we recognized $ 1.4 million in impairment, restructuring and other charges, which included $ 0.6 million in acquisition related costs, $ 0.2 million for facility closure costs for operational efficiency activities, and $ 0.6 million for employee terminations.

The following tables summarize impairment, restructuring and other charges (benefits), net for the periods set forth below (in thousands):

Three Months Ended December 31, 2024

Optoelectronics and

3 unchanged sentences

Employee termination costs

Three Months Ended December 31, 2025

Optoelectronics and

Manufacturing

Security Division

Acquisition-related costs

Employee termination costs

Impairment of assets

Six Months Ended December 31, 2024

Optoelectronics and

Manufacturing

Security Division

Acquisition-related costs

Employee termination costs

Facility closures/consolidation

Three Months Ended September 30, 2025

Six Months Ended December 31, 2025

Optoelectronics and

3 unchanged sentences

Employee termination costs

The accrued liability for restructuring and other charges is included in Other accrued expenses and current liabilities in the condensed consolidated balance sheets.

The changes in the accrued liability for restructuring and other charges for the three-month period ended September 30, 2025 were as follows (in thousands):

Impairment of assets

The accrued liability for impairment, restructuring and other charges is included in Other accrued expenses and current liabilities in our condensed consolidated balance sheets.

The changes in the accrued liability for impairment, restructuring and other charges for the six-month period ended December 31, 2025 were as follows (in thousands):

Consolidation

Balance as of June 30, 2025

Restructuring and other charges

Payments, adjustments and reimbursements, net

Balance as of September 30, 2025

Restructuring and other charges, net

Payments and adjustments, net

Balance as of December 31, 2025

Revolving Credit Facility

3 unchanged sentences

Other enhancements include the permitted securitization of certain qualifying assets of up to $ 100 million.

Borrowings under the facility bore interest at SOFR plus a margin of 1.25 % as of September 30, 2025 (which margin can range from 1.0 % to 1.75 % based on our consolidated net leverage ratio as defined in the credit facility).

Borrowings under the facility bore interest at SOFR plus a margin of 1.25 % as of December 31, 2025 (which margin can range from 1.0 % to 1.75 % based on our consolidated net leverage ratio as defined in the credit facility).

Letters of credit reduce the amount available to borrow under the credit facility by their face value amount.

The unused portion of the facility bore a commitment fee of 0.15 % as of September 30, 2025 (which fee can range from 0.10 % to 0.25 % based on our consolidated net leverage ratio as defined in the credit facility).

The unused portion of the facility bore a commitment fee of 0.15 % as of December 31, 2025 (which fee can range from 0.10 % to 0.25 % based on our consolidated net leverage ratio as defined in the credit facility).

Our borrowings under the credit agreement are guaranteed by certain of our U.S.-based subsidiaries and are secured by substantially all of our assets and substantially all the assets of certain of our subsidiaries.

The credit facility contains various representations and warranties, affirmative, negative and financial covenants and events of default.

As of September 30, 2025, there were $ 252.1 million of borrowings outstanding under the revolving credit facility, $ 95.4 million outstanding under the letters of credit sub-facility, and $ 98.8 million outstanding under the term loan.

As of September 30, 2025, the amount available to borrow under the revolving credit facility was $ 377.5 million.

As of December 31, 2025, there were no borrowings outstanding under the revolving credit facility, $ 113.6 million outstanding under the letters of credit sub-facility, and $ 97.5 million outstanding under the term loan.

As of December 31, 2025, the amount available to borrow under the revolving credit facility was $ 611.4 million.

Loan amounts under the revolving credit facility may be borrowed, repaid and re-borrowed during the term.

2 unchanged sentences

It is our practice to routinely borrow and repay several times per year under the revolving facility and therefore, borrowings under the revolving credit facility are included in current liabilities.

As of September 30, 2025, we were in compliance with all financial covenants under this credit facility.

As of December 31, 2025, we were in compliance with all financial covenants under this credit facility.

In September 2022, we entered into an interest rate swap agreement in order to mitigate the interest rate risk on a portion of the interest payments expected to be made on the borrowings outstanding under the revolving credit facility and term loan.

1 unchanged sentence

2.25 % Convertible Senior Notes Due 2029

In July 2024, we issued an aggregate of $ 350.0 million principal amount of 2.25 % convertible senior notes due in August 2029 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, at an issuance price equal to 97.5 % of the principal amount.

In July 2024, we issued an aggregate of $ 350.0 million principal amount of 2.25 % convertible senior notes due in August 2029 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), at an issuance price equal to 97.5 % of the principal amount.

The 2029 Notes were issued pursuant to and are governed by an indenture dated July 19, 2024.

The proceeds from the issuance of the 2029 Notes were $ 340.4 million, net of the issuance discount and debt issuance costs.

The 2029 Notes are unsecured obligations which bear regular interest at 2.25 % per annum payable semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2025.

The 2029 Notes are unsecured obligations which bear regular interest at 2.25 % per annum payable semiannually in arrears on February 1 and August 1 of each year.

The 2029 Notes will mature on August 1, 2029, unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

6 unchanged sentences

or (iv) if we call any or all of the 2029 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2029 Notes called for redemption.

On or after May 1, 2029, the 2029 Notes are convertible by the holders thereof at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

On or after May 1, 2029, the 2029 Notes will be convertible by the holders thereof at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

Holders of the 2029 Notes who convert the 2029 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2029 Notes, or in connection with a redemption may be entitled to an increase in the conversion rate.

We accounted for the issuance of the 2029 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.

The following table is a summary of the 2029 Notes as of September 30, 2025 (in thousands):

September 30,

The following table is a summary of the 2029 Notes as of December 31, 2025 (in thousands):

Principal amount

2 unchanged sentences

Fair value (Level 2)

The 2029 Notes were not eligible for conversion as of September 30, 2025.

As of December 31, 2025, one of the conditions allowing holders of the 2029 Notes to convert had been met.

The trading price of our common stock remained above 130 % of the applicable $ 191.98 conversion price for at least 20 trading days during the 30 consecutive trading-day period ending on, and including, December 31, 2025 (the last trading day of the quarter ended December 31, 2025), resulting in the right of the holders of the 2029 Notes to convert their 2029 Notes beginning January 2, 2026 through March 31, 2026 (the last trading day of the quarter ending March 31, 2026).

Should the holders of the 2029 Notes elect to convert some or all of the 2029 Notes, we intend to draw on our revolving credit facility to settle the obligation.

We have sufficient availability on our revolving credit facility to fully refinance the principal amount of the 2029 Notes for more than one year, accordingly, the net carrying amount of the 2029 Notes continues to be classified as a noncurrent liability on the condensed consolidated balance sheets.

To the extent that conversion of the 2029 Notes cannot be refinanced with the revolving credit facility in the future, the portion that cannot be refinanced will be classified as current and recorded in current portion of long-term debt on the condensed consolidated balance sheets.

No sinking fund is provided for the 2029 Notes, which means that we are not required to redeem or retire them periodically.

As of September 30, 2025 we were in compliance with applicable covenants under the indenture governing the 2029 Notes.

For the three months ended September 30, 2025, total interest expense for the 2029 Notes was $ 2.4 million (comprised of $ 2.0 million of contractual interest expense and $ 0.4 million of amortization of debt discount and issuance costs) compared with total interest expense for the 2029 Notes of $ 1.9 million (comprised of $ 1.6 million of contractual interest expense and $ 0.3 million of amortization of debt discount and issuance costs) for the three months ended September 30 2024.

As of December 31, 2025 we were in compliance with applicable financial covenants under the indenture governing the 2029 Notes.

For each of the three months ended December 31, 2025 and 2024, total interest expense for the 2029 Notes was $ 2.4 million (comprised of $ 2.0 million of contractual interest expense and $ 0.4 million of amortization of debt discount and issuance costs).

For the six months ended December 31, 2025, total interest expense for the 2029 Notes was $ 4.8 million (comprised of $ 3.9 million of contractual interest expense and $ 0.9 million of amortization of debt discount and issuance costs) compared with total interest expense for the 2029 Notes of $ 4.3 million (comprised of $ 3.5 million of contractual interest expense and $ 0.8 million of amortization of debt discount and issuance costs) for the six months ended December 31 2024.

The unamortized debt issuance cost is amortized on the effective interest method over the life of the 2029 Notes.

0.50 % Convertible Senior Notes Due 2031

In November 2025, we issued an aggregate of $ 575.0 million principal amount of 0.50 % convertible senior notes due in February 2031 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act at an issuance price equal to 98 % of the principal amount.

The 2031 Notes were issued pursuant to and are governed by an indenture dated November 20, 2025.

The proceeds from the issuance of the 2031 Notes were approximately $ 562.9 million, net of the issuance discount and debt issuance costs.

The 2031 Notes are unsecured obligations which bear regular interest at 0.50 % per annum payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2026.

The 2031 Notes will mature on February 1, 2031, unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The 2031 Notes are convertible into a combination of cash and shares of our common stock, at an initial conversion rate of 2.8263 shares of common stock per $1,000 principal amount of 2031 Notes, which is equivalent to an initial conversion price of approximately $ 353.82 per share of our common stock.

The default settlement method is a combination settlement with a specified dollar amount of $ 1,000 per $1,000 principal amount of notes.

The conversion rate is subject to customary adjustments for certain dilutive events.

We may redeem for cash all or any portion of the 2031 Notes, at our option, on or after February 6, 2029 if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days at a redemption price equal to 100 % of the principal amount of the 2031 Notes to be redeemed, plus accrued and unpaid interest up to the day before the redemption date.

The holders of the 2031 Notes may require us to repurchase the 2031 Notes upon the occurrence of certain fundamental change transactions at a redemption price equal to 100 % of the principal amount of the 2031 Notes redeemed, plus accrued and unpaid interest up to the day before the redemption date.

Holders of the 2031 Notes may, at their option, convert all or a portion of their 2031 Notes prior to November 1, 2030, in multiples of $1,000 principal amounts, only (i) during any calendar quarter if our common stock price exceeds 130 % of the conversion price for at least 20 trading days during the 30 consecutive trading days at the end of the prior calendar quarter, (ii) during the five consecutive business days immediately after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the 2031 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day, (iii) upon the occurrence of specified corporate events or certain distributions on our common stock;

or (iv) if we call any or all of the 2031 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2031 Notes called for redemption.

On or after November 1, 2030, the 2031 Notes will be convertible by the holders thereof at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

Holders of the 2031 Notes who convert the 2031 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2031 Notes, or in connection with a redemption may be entitled to an increase in the conversion rate.

We accounted for the issuance of the 2031 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.

The following table is a summary of the 2031 Notes as of December 31, 2025 (in thousands):

Principal amount

Unamortized debt discount and issuance costs

Net carrying amount

Fair value (Level 2)

The 2031 Notes were not eligible for conversion as of December 31, 2025.

No sinking fund is provided for the 2031 Notes, which means that we are not required to redeem or retire them periodically.

As of December 31, 2025 we were in compliance with applicable financial covenants under the indenture governing the 2031 Notes.

For the three and six months ended December 31, 2025, total interest expense for the 2031 Notes was $ 0.6 million (comprised of $ 0.3 million of contractual interest expense and $ 0.3 million of amortization of debt discount and issuance costs).

The unamortized debt issuance cost is amortized on the effective interest method over the life of the 2031 Notes.

Other Borrowings

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dollars, primarily for the issuance of letters of credit.

As of September 30, 2025, $ 59.9 million was outstanding under these letter-of-credit facilities.

As of September 30, 2025, the total amount available under these credit facilities was $ 35.6 million.

As of December 31, 2025, $ 62.8 million was outstanding under these letter-of-credit facilities.

As of December 31, 2025, the total amount available under these credit facilities was $ 58.3 million.

Long-term debt consisted of the following (in thousands):

September 30,

2029 Notes, net

2031 Notes, net

Other long-term debt

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Long-term portion of debt

Future principal payments of long-term debt by fiscal year as of September 30, 2025 are as follows (in thousands):

Future principal payments of long-term debt by fiscal year as of December 31, 2025 are as follows (in thousands):

2026 (6 months remaining)

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Stock-based Compensation

As of September 30, 2025, we maintained the Amended and Restated 2012 Incentive Award Plan (the “OSI Plan”) as a stock-based employee compensation plan.

As of December 31, 2025, we maintained the Amended and Restated 2012 Incentive Award Plan (the “OSI Plan”) as a stock-based employee compensation plan.

We recorded stock-based compensation expense in the consolidated statements of operations as follows (in thousands):

Three Months Ended September 30,

Three Months Ended December 31,

Six Months Ended December 31,

Cost of goods sold

2 unchanged sentences

Stock-based compensation expense

As of September 30, 2025, total unrecognized compensation cost related to share-based compensation grants under the OSI Plan were estimated at $ 0.9 million for stock options and $ 19.9 million for restricted stock units (“RSUs”).

As of December 31, 2025, total unrecognized compensation cost related to share-based compensation grants under the OSI Plan were estimated at $ 1.3 million for stock options and $ 19.1 million for restricted stock units (“RSUs”).

We expect to recognize these costs over a weighted average period of 2.3 years with respect to the stock options and 2.3 years with respect to the RSUs.

The following summarizes stock option activity during the three months ended September 30, 2025:

The following summarizes stock option activity during the six months ended December 31, 2025:

Weighted-Average

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Expired or forfeited

Outstanding at September 30, 2025

Exercisable at September 30, 2025

The following summarizes RSU award activity during the three months ended September 30, 2025:

Outstanding at December 31, 2025

Exercisable at December 31, 2025

The following summarizes RSU award activity during the six months ended December 31, 2025:

Nonvested at June 30, 2025

Nonvested at September 30, 2025

As of September 30, 2025, there were approximately 1.6 million shares available for grant under the OSI Plan.

Nonvested at December 31, 2025

As of December 31, 2025, there were approximately 1.6 million shares available for grant under the OSI Plan.

Under the terms of the OSI Plan, RSUs granted from the pool of shares available for grant reduce the pool by 1.87 shares for each award granted.

RSUs forfeited and returned to the pool of shares available for grant increase the pool by 1.87 shares for each award forfeited.

We granted 54,563 and 48,185 performance-based RSUs during the three months ended September 30, 2024 and 2025, respectively.

We granted 80,682 and 48,392 performance-based RSUs during the six months ended December 31, 2024 and 2025, respectively.

These performance-based RSU awards are contingent on the achievement of certain performance metrics.

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If additional paid-in capital were to be reduced to zero, we would record the remainder of the excess purchase price over par value as a reduction of retained earnings.

During the three months ended September 30, 2025, we did no t repurchase any shares of common stock.

As of September 30, 2025, there were 1,190,556 shares remaining available for repurchase under the authorized repurchase program.

During the six months ended December 31, 2025, we repurchased 546,945 shares of common stock for an aggregate purchase price of $ 146.1 million in connection with the issuance of the 2031 Notes.

As of December 31, 2025, there were 643,611 shares remaining available for repurchase under the authorized repurchase program.

We have not paid any dividends since the consummation of our initial public offering in 1997 and we do not currently intend to pay any dividends in the foreseeable future.

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Under the terms and conditions of the purchase agreements associated with certain acquisitions, we may be obligated to make additional payments based on the achievement of certain sales or profitability milestones through the acquired operations.

For agreements that contain contingent consideration obligations, the remaining maximum amount of such potential future payments is $ 42.8 million as of September 30, 2025.

For agreements that contain contingent consideration obligations, the remaining maximum amount of such potential future payments is $ 37.9 million as of December 31, 2025.

Projections and estimated probabilities are used to estimate future contingent earnout payments, which are discounted back to present value to compute contingent earnout liabilities.

The following table provides a roll-forward from June 30, 2025 to September 30, 2025 of the contingent consideration liability, which is included in Other accrued expenses and current liabilities and other long-term liabilities in our consolidated balance sheets (in thousands):

The following table provides a roll-forward from June 30, 2025 to December 31, 2025 of the contingent consideration liability, which is included in other accrued expenses and current liabilities and other long-term liabilities in our consolidated balance sheets (in thousands):

Beginning fair value, June 30, 2025

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Payments on contingent earnout obligations

Ending fair value, September 30, 2025

Ending fair value, December 31, 2025

We are periodically required to provide performance bonds to do business with certain customers.

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However, we are ultimately liable for claims that may occur against them.

As of June 30, 2025 and September 30, 2025, we had a maximum financial exposure related to performance bonds of approximately $ 104 million and $ 105 million, respectively.

As of June 30, 2025 and December 31, 2025, we had a maximum financial exposure related to performance bonds of approximately $ 104 million and $ 107 million, respectively.

As described in Note 8, we and several of our foreign subsidiaries have issued letters of credit under the revolving credit facility and international bank facilities.

1 unchanged sentence

We have no history of significant claims and there are no pending matters that would require us to perform under any of these arrangements, and we believe that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the consolidated financial statements.

Accordingly, no liability for any of these arrangements has been recorded as of June 30, 2025 and September 30, 2025.

Accordingly, no liability for any of these arrangements has been recorded as of June 30, 2025 and December 31, 2025.

Environmental Contingencies

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It is not possible to determine the maximum potential amount under these indemnification agreements due to, among other factors, the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

We have not recorded any liability for costs related to contingent indemnification obligations as of September 30, 2025.

We have not recorded any liability for costs related to contingent indemnification obligations as of December 31, 2025.

Product Warranties

6 unchanged sentences

The following table presents changes in warranty provisions (in thousands):

Three Months Ended September 30,

Six Months Ended December 31,

Balance at beginning of period

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As such, there can be significant volatility in interim tax provisions.

The effective tax rates for the three months ended September 30, 2024 and 2025 were 21.9 % and 19.9 %, respectively.

During the three months ended September 30, 2024 and 2025, we recognized a net discrete tax benefit of $ 0.5 million and $ 0.9 million, respectively, related to equity-based compensation under ASU 2016-09 and changes in prior-year estimates and uncertain tax positions.

The effective tax rates for the three months ended December 31, 2024 and 2025 were 23.3 % and 19.5 %, respectively.

During the three months ended December 31, 2024, we recognized a net discrete tax benefit of $ 0.3 million, related to equity-based compensation under ASU 2016-09.

During the three months ended December 31, 2025 we recognized a net discrete tax benefit of $ 0.9 million related to equity-based compensation under ASU 2016-09 and a benefit of $ 1.0 million for changes in prior years estimates.

The effective tax rates for the six months ended December 31, 2024 and 2025 were 22.9 % and 19.7 %, respectively.

During the six months ended December 31, 2024, we recognized a net discrete tax benefit of $ 0.8 million, related to equity-based compensation under ASU 2016-09.

During the six months ended December 31, 2025 we recognized a net discrete tax benefit of $ 1.7 million, related to equity-based compensation under ASU 2016-09 and a benefit of $ 1.0 million for changes in prior-year tax estimates.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law.

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We disclose segment income (loss) from operations as our measure of segment profit/loss, reconciled to consolidated income (loss) from operations.

The measure of segment income (loss) from operations excludes restructuring and other charges presented below which are presented to reconcile to consolidated income from operations.

The measure of segment income (loss) from operations excludes impairment, restructuring and other charges presented below which are presented to reconcile to consolidated income from operations.

Business segment disclosures consider information used by/provided to our chief operating decision maker (“CODM”).

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The following tables present our results of operations and identifiable assets by our three industry segments, along with amounts for Corporate/Eliminations, which are reconciled to consolidated amounts (in thousands):

Three Months Ended September 30, 2024

Three Months Ended December 31, 2024

Optoelectronics

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Segment income (loss) from operations

Restructuring and other charges

Impairment, restructuring and other charges

Income (loss) from operations

1 unchanged sentence

Depreciation and amortization

Three Months Ended September 30, 2025

(1) For the three months ended December 31, 2024, one customer in the Security division accounted for 10 % of the Company’s consolidated net revenues.

Three Months Ended December 31, 2025

Optoelectronics

8 unchanged sentences

Segment income (loss) from operations

Restructuring and other charges

Impairment, restructuring and other charges

Income (loss) from operations

1 unchanged sentence

Depreciation and amortization

For the three months ended September 30, 2024, one Security division customer accounted for 14 % of consolidated net revenues.

For the three months ended September 30, 2025, no customer accounted for 10% or more of the Company’s consolidated net revenues.

September 30,

(2) For the three months ended December 31, 2025, no customer accounted for 10% or more of the Company’s consolidated net revenues.

Six Months Ended December 31, 2024

Optoelectronics

Manufacturing

Revenues (3):

External customer revenue

Revenue between segments

Total revenues

Cost of goods sold

Selling, general and administrative expenses

Research and development expenses

Segment income (loss) from operations

Impairment, restructuring and other charges

Income (loss) from operations

Capital expenditures

Depreciation and amortization

(3) For the six months ended December 31, 2024, one customer in the Security division accounted for 12 % of the Company’s consolidated net revenues.

Six Months Ended December 31, 2025

Optoelectronics

Manufacturing

Revenues (4):

External customer revenue

Revenue between segments

Total revenues

Cost of goods sold

Selling, general and administrative expenses

Research and development expenses

Segment income (loss) from operations

Impairment, restructuring and other charges

Income (loss) from operations

Capital expenditures

Depreciation and amortization

(4) For the six months ended December 31, 2025, no customer accounted for 10% or more of the Company’s consolidated net revenues.

Assets (1) —by Segment:

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Corporate/Eliminations (2)

(1) As of June 30, 2025 and September 30, 2025, one customer in the Security division accounted for 42 % and 44 % of accounts receivable, net, respectively.

(1) As of June 30, 2025 and December 31, 2025 one customer in the Security division accounted for 42 % and 41 % of the Company’s accounts receivable, net, respectively.

(2) Eliminations in assets reflect the amount of inter-segment profits in inventory and inter-segment ROU assets under ASC 842 as of the balance sheet date.

Such inter-segment profit will be realized when inventory is shipped to the external customers of the Security and Healthcare divisions.

Such inter-segment profit in inventory will be realized when the associated inventory is shipped to the external customers of the Security and Healthcare divisions.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements