OSI Systems, Inc. (NASDAQ:OSIS) Q4 2023 Earnings Call Transcript

Deepak Chopra: No. I would say that is a new model. But keep in mind, one of the things that most people don’t realize it, we have been doing that kind of a model in our Security business, so that we have a lot of experience. And now that we are looking at in the Healthcare business, we want to expand that, but it’s a new business and it again has to be to educate the customer that is more efficient for the patient’s health and it’s more economical. So that we think that this model has some real good legs to stand on for growth, but it’s going to take some time and it’s going to take some education and we are working diligently with that, but we are not — we have good experience in it.

Jeff Martin: Very helpful. Thank you.

Operator: Thank you. [Operator Instructions] Our next question comes from Christopher Glynn with Oppenheimer. Please proceed.

Christopher Glynn: Thanks. Good morning. Good afternoon depending on where you are and congrats on all the success here. I was curious about the outlook for Healthcare revenue specifically. The absolute strength in the fourth quarter does impact the full year comp and it sounds like it was a little bit clustered in your — you have kind of talked about more a good bit beyond fiscal 2024 for the new patient monitoring platforms to ramp up. So just curious how to think about the continuing kind of base run rate of that business in the interim as we model 2024?

Deepak Chopra: Keep in — it’s Deepak here. Keep in mind that the Healthcare business tends to be a single — mid-single-digit growth thing. Also it’s a book and ship kind of a model and it’s not backlog dependent and that’s what happened in Q4. As you know from the previous call from Q3, we had some contracts that got pushed into Q4. We delivered in Q4 and so that we look at this as a continued single-digit growth model. And there are some challenges, as we all know, in the Healthcare industry, the hospitals are having a tough time. But we, again, think in that model that with the investment we are making in R&D, with the new platform that we are talking about it and this new services model, subscription model, leasing model that we are talking about, which is new for our Healthcare business that could have some potential legs to grow the business.

Christopher Glynn: Okay. Great. Thanks for that. And then I was just curious, when you talk about these nice content and reference wins around Olympics or FIFA, which happens to that equipment after these kind of large events?

Deepak Chopra: Well, it changes from customer-to-customer. In some cases, it’s only rental equipment, and at the end of that, the equipment, we are able to sell the equipment. In some cases, they buy the equipment and then they donate the equipment to various places. So it’s very much dependent upon each individual country, each individual customer. Most important thing in this thing is what I wanted to say was, it’s a great achievement and a very good name recognition that for that kind of games worldwide recognized Olympics game or the FIFA to have Rapiscan as the provider of that service, it becomes a big positive as a build up the image and the trade name. And that’s what the thing — exciting thing about it, and this particular contract, again, was a competitive international bid and we are very proud about it that we got selected as a primary supplier of the Security.

Christopher Glynn: Yeah. And in terms of venues like that, what was the consumption or utilization of Security equipment such as yours, maybe five years ago, you can adjust the reference point. But is this kind of something that’s becoming — has become more standard in just the past couple of years?