OSI Systems, Inc. (OSI), a US-based medical devices company, has reported revenues of $144.1 million for the third quarter of fiscal 2009, down 8%, compared with the revenues of $156.7 million in the year-ago quarter. It reported a net income of $2.6 million, or $0.15 per diluted share, for the third quarter of fiscal 2009, compared with the net income of $6.9 million, or $0.39 per diluted share, in the year-ago quarter.
Fiscal Year 2009 Outlook
Looking ahead to fiscal year 2009, the company increased its earnings guidance to the range of $0.85 – $0.93 per share from previous guidance of $0.81 – $0.93 per share.
During the third quarter and nine months ended March 31, 2008, the company was favorably impacted by a one-time $4.3 million tax benefit in connection with a transaction. Excluding the impact of restructuring and other charges and the one-time tax benefit, net income for the third quarter of fiscal 2009 would have been about $4.2 million or $0.24 per diluted share compared to net income of $3.7 million or $0.20 per diluted share for the third quarter of fiscal 2008.
For the nine months of fiscal 2009, the company reported revenues of $451.3 million, virtually flat as against $451.9 million revenue for the fiscal 2008. Without the adverse impact of foreign exchange for the nine months of fiscal 2009, revenues would have grown about 3%. Net income for the nine months of fiscal 2009was $6.9 million, or $0.39 per diluted share, compared to net income of $8.3 million, or $0.47 per diluted share, for the nine months of fiscal 2008. Excluding the impact of restructuring and other charges, and the one-time prior year tax benefit, net income for the nine months of fiscal 2009 would have been about $10.8 million or $0.61 per diluted share compared to a net income of $6.5 million or $0.37 per diluted share for the nine months of fiscal 2008. Discussion of adjustments to arrive at non-GAAP figures for the three and nine months of fiscal 2009 is provided to allow for the comparison of underlying earnings, net of restructuring and other charges, and this tax benefit, thus providing additional insight into the on-going operations of the company.
For the third quarter and nine months of fiscal 2009, the company incurred restructuring and other charges of $2.4 million and $6.0 million, respectively, compared to $1.2 million and $3.4 million for the comparable periods of fiscal 2008. In fiscal 2009, restructuring charges were primarily incurred in response to the expected slowdown in the company’s Healthcare division as part of the company’s cost reduction program. In addition, during the third quarter of the current year, the company recorded a non-recurring charge related to litigation of $2 million.
Deepak Chopra, OSI Systems’ chairman and chief executive officer, stated, Our financial results for the third quarter of fiscal 2009 continue to demonstrate the earnings-generating potential of our businesses. We significantly improved the bottom line while simultaneously generating positive free cash flow. These achievements, in light of the challenging economic conditions, are the direct result of our initiatives over the past two years to implement organizational changes that have reduced our cost structure, improved our operating efficiencies and emphasized working capital management.
Chopra continued, Our Security Division continues to show improved financial results, with strong global demand for air cargo as well as other cargo and vehicle inspection products. Security sales for the third quarter increased 14% from fiscal 2008 excluding the impact of foreign exchange rates and operating margins improved significantly. In addition, strong bookings led to a 9% increase in the Security Division’s backlog since the beginning of the fiscal year. The business climate for our Healthcare division continues to be challenging, and for the third quarter we reported a 21% decline in revenues. The revenue challenges were most acutely felt in the North American market, where economic factors including credit availability have led to certain hospitals delaying their normal equipment purchases. We believe these are timing related as we have not lost any significant sales opportunities. In response to these market conditions, we moved proactively in the second quarter and took further steps in the third quarter to address our Healthcare cost structure, the benefits of which are partially reflected in our third quarter results and will be further reflected in the final quarter of fiscal 2009.
During the nine months of fiscal 2009, the company generated cash flow from operations of $40.1 million as compared to using $9.9 million during the nine months ended March 31, 2008. Further, during the nine months of fiscal 2009, the company repurchased 620,000 shares of its common stock for about $7.4 million.
As of March 31, 2009, the company had a backlog of $231 million compared to $219 million as of March 31, 2008.