OSI Systems, Inc. (NASDAQ:OSIS) Q1 2024 Earnings Call Transcript

Lawrence Solow: Okay. And just lastly, just shifting gears real fast on the Healthcare, slower start to the year than I think you had expected. I guess two questions. And again, I’m not — if you can share with us your thoughts. But maybe I know you had thought that the segment would be up on both a revenue and an operating profit basis on a full year basis. Do you still feel like that’s attainable? And then second part of that question is, you mentioned sort of a shift to more of a leasing versus upfront sale of the equipment. Is that like in its infancy? Is that still pretty small today? And does that kind of coincide at all with your perhaps I think you’re planning on next-generation product coming out soon over the next couple of years. Is that those two kind of correlate with one and another? That would be great if you put any color on that.

Deepak Chopra: Well, good question. Good analysis you’ve done. On the equipment side, definitely, we were disappointed, especially in U.S. with the equipment sale. As you, I’m sure, know, the hospitals are going through a tough time. There are two other things that what you asked. One is, we continue to do the R&D investment to develop a new platform of the patient monitoring. At the same time, this new model that is in the infancy that we have started, the subscription and the software model, the SaaS model, it’s a little different model. But interestingly, thing is this is catching on. There’s a lot of interest, though, it’s something in the infancy new that we are doing. But just think of it, we’ve been doing this thing in the Security side.

So now to do that in the Healthcare side, we at least know the building blocks. Now the question is how to educate the customers and how to be able to prove to them. But I think longer term, we are quite excited about this new model of ongoing revenue, what we call like the turnkey model that we have on the Security side. Alan, do you want to add something?

Alan Edrick: Sure. And to your questions, Larry, yes, those new models are in their infancy, and we think they’re going to be growing nicely over the coming years. And our expectation — the team’s expectation is that the Healthcare division will grow for the full fiscal year in ’24, both on the top line and the bottom line.

Operator: [Operator Instructions]. Our next question comes from the line of Christopher Glynn from Oppenheimer.

Christopher Glynn: A lot has been asked. One follow-up. I think you said you expect on Healthcare, some nice improvement starting sequentially really for the balance of the year relative to the first quarter. It sounds like you were caught off guard a little bit in the first quarter after some fourth quarter strength. So wondering how you describe the visibility to the expected pickup there?

Deepak Chopra: Well, yes, we are disappointed in the first quarter. But keep in mind that over the years, firstly, it’s a single-digit growth area, and it’s booked and shipped. It’s not a backlog driven. So some orders came in Q4. In Q1, we were expecting some, it didn’t happen. So it is a little bit disappointing, but the team feels very much focused onto it that the remainder of the year will get better. And the innovation that we are doing both in the software SaaS model and our continued development of the new product portfolio, that’s not going to have what I would call a significant impact in 2024. It’s for a longer years. Focus right now is to be able to capture the accounts that we have and be able to work with the hospitals of alternates to them of making them more efficient. Alan?

Alan Edrick: No, I think that describes it well.