OSI SYSTEMS INC Goodwill & Intangibles Disclosure
4.GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill by segment for fiscal 2024 and 2025 are as follows (in thousands):
Optoelectronics | ||||||||||||
and | ||||||||||||
Security | Manufacturing | Healthcare | ||||||||||
| Division |
| Division |
| Division |
| Consolidated | |||||
Balance as of June 30, 2023 | $ | 230,662 | $ | 70,388 | $ | 48,455 | $ | 349,505 | ||||
Goodwill acquired or adjusted during the period |
| 1,628 | 827 | — | 2,455 | |||||||
Foreign currency translation adjustment |
| (75) | (408) | 3 | (480) | |||||||
Balance as of June 30, 2024 | $ | 232,215 | $ | 70,807 | $ | 48,458 | $ | 351,480 | ||||
Goodwill acquired or adjusted during the period |
| 33,804 | — | — | 33,804 | |||||||
Foreign currency translation adjustment |
| 346 | 1,516 | 247 | 2,109 | |||||||
Balance as of June 30, 2025 | $ | 266,365 | $ | 72,323 | $ | 48,705 | $ | 387,393 | ||||
Intangible assets consisted of the following (dollar amounts in thousands):
June 30, 2024 | June 30, 2025 | |||||||||||||||||||
Weighted | Gross | Gross | ||||||||||||||||||
Average | Carrying | Accumulated | Intangibles | Carrying | Accumulated | Intangibles | ||||||||||||||
| Lives |
| Value |
| Amortization |
| Net |
| Value |
| Amortization |
| Net | |||||||
Amortizable assets: | ||||||||||||||||||||
Software development costs |
| 7 years | $ | 79,228 | $ | (10,646) | $ | 68,582 | $ | 91,386 | $ | (8,941) | $ | 82,445 | ||||||
Patents |
| 20 years |
| 9,116 | (3,861) | 5,255 |
| 9,617 | (4,353) | 5,264 | ||||||||||
Developed technology |
| 9 years |
| 70,186 | (45,740) | 24,446 |
| 99,937 | (55,865) | 44,072 | ||||||||||
Customer relationships |
| 7 years |
| 51,113 | (41,421) | 9,692 |
| 20,991 | (9,380) | 11,611 | ||||||||||
Total amortizable assets |
| 209,643 | (101,668) | 107,975 |
| 221,931 | (78,539) | 143,392 | ||||||||||||
Non-amortizable assets: | ||||||||||||||||||||
Trademarks |
| 31,554 | — | 31,554 |
| 39,898 | — | 39,898 | ||||||||||||
Total intangible assets | $ | 241,197 | $ | (101,668) | $ | 139,529 | $ | 261,829 | $ | (78,539) | $ | 183,290 | ||||||||
Amortization expense related to intangible assets was $19.0 million, $22.8 million and $21.6 million for fiscal 2023, 2024 and 2025, respectively.
At June 30, 2025, the estimated future amortization expense was as follows (in thousands):
2026 |
| $ | 17,994 |
2027 |
| 18,117 | |
2028 |
| 17,216 | |
2029 |
| 14,653 | |
2030 | 13,724 | ||
Thereafter |
| 61,688 | |
Total | $ | 143,392 |
Software development costs for software products incurred before establishing technological feasibility are charged to operations. Software development costs incurred after establishing technological feasibility are capitalized on a product-by-product basis until the product is available for general release to customers at which time amortization begins. Annual amortization, charged to cost of goods sold, is the amount computed using the ratio that current revenues for a product bear to the total current and anticipated future revenues for that product. In the event that future revenues are not estimable, such costs are amortized on a straight-line basis over the remaining estimated economic life of the product. Amortizable assets that have not yet begun to be amortized are included in “Thereafter” in the table above. During fiscal 2023, 2024 and 2025, we capitalized software development costs in the amounts of $16.2 million, $16.6 million and $16.9 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 25, 2025 | Showing above |
| 2024 | Aug 29, 2024 | |
| 2023 | Aug 29, 2023 | |
| 2022 | Aug 19, 2022 | |
| 2021 | Aug 23, 2021 | |
| 2020 | Aug 21, 2020 | |
| 2019 | Aug 27, 2019 | |
| 2018 | Aug 28, 2018 | |
| 2017 | Sep 7, 2017 | |
| 2016 | Aug 19, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.