OSI Systems Inc (OSIS)

Interest coverage

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	—	188,507	135,279	129,291	115,371
Interest expense	US$ in thousands	31,430	27,847	20,041	8,962	16,731
Interest coverage		0.00	6.77	6.75	14.43	6.90

June 30, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $—K ÷ $31,430K
= 0.00

The interest coverage ratio for OSI Systems Inc. exhibits notable fluctuation over the specified period. As of June 30, 2021, the ratio stood at 6.90, indicating the company earned nearly seven times its interest expenses, reflecting a strong capacity to meet its interest obligations at that time. By June 30, 2022, this ratio significantly increased to 14.43, suggesting an improved ability to cover interest expenses, potentially due to higher earnings or reduced interest costs.

However, by June 30, 2023, the interest coverage ratio declined markedly to 6.75, although it remained well above the critical threshold of 1.5-2.0, indicating continued sufficient coverage of interest payments. The ratio remained relatively stable into June 30, 2024, at 6.77, reflecting ongoing earnings that comfortably cover interest obligations.

Alarmingly, by June 30, 2025, the interest coverage ratio drops to 0.00, implying that earnings before interest and taxes (EBIT) or its equivalent may have fallen to zero or negative levels, thus rendering the company incapable of covering its interest expenses from operating income. This dramatic decline suggests a potential financial distress signal, warranting further analysis of underlying causes such as reduced profitability, increased interest obligations, or extraordinary charges impacting earnings.

Overall, the trend indicates initial strength in OSI Systems Inc.'s ability to service its interest obligations, followed by a significant deterioration in the most recent period, culminating in an inability to meet interest expenses purely from operational earnings.