OSI Systems, Inc. is a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications. It sells its products in diversified markets, including homeland security, healthcare, defense and aerospace. The company has three operating divisions: Security, Healthcare, and Optoelectronics and Manufacturing.
Most of the company's customers are governments. With homeland security spending at all-time highs, OSIS has seen double-digit growth over the past few years, particularly in the company's security division. The other divisions have also seen growth due to a broad-based global economic recovery from the recession.
The threat of terrorism jumped to the forefront of American foreign policy and defense spending after September 11, 2001. Since that time, defense spending has increased nearly $200 billion in order to pursue wars in Afghanistan and Iraq, but also to secure the US borders and ensure the safety of air travel and international shipping. OSI Systems' products are sold to governments and government contractors around the world to assist in the noninvasive X-ray screening of cargo, travelers, and vehicles. The company is highly exposed to the forces that govern government spending and any decreased allocations for port, air cargo, or other shipping security would pose a significant challenge to OSIS's continued success.
North America provides approximately 60% of all of the company's revenues. The remaining 40% is distributed among Europe and Asia  Business is conducted in a variety of global currencies, and changes in currency values are a risk to revenue. The devaluation of the US dollar versus other currencies makes doing business in other countries more expensive in US dollars, but also made revenue abroad worth more in US dollars. Because OSIS makes the majority of its revenues from the US, a decrease in the value of the dollar raises revenues.
Since OSIS is a diversified technology firm, different divisions in the company face different competitors. In addition, the competitors do not offer very similar products, improving the competitive background of OSIS's industries.