SEC Filing | OSI Systems, Inc.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-23125

OSI SYSTEMS, INC.

(Exact name of registrant as specified in its charter)


Delaware		33-0238801
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

12525 Chadron Avenue

Hawthorne, California 90250

(Address of principal executive offices) (Zip Code)

(310) 978-0516

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		OSIS		The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 25, 2023, there were 16,727,882 shares of the registrant’s common stock outstanding.

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OSI SYSTEMS, INC.

INDEX


		PAGE

PART I — FINANCIAL INFORMATION		3

Item 1 —	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets at June 30, 2022 and March 31, 2023	3
	Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2022 and 2023	4
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2022 and 2023	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended March 31, 2022 and 2023	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2022 and 2023	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3 —	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4 —	Controls and Procedures	30

PART II — OTHER INFORMATION		32
Item 1 —	Legal Proceedings	32
Item 1A —	Risk Factors	32
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3 —	Defaults Upon Senior Securities	32
Item 4 —	Mine Safety Disclosures	32
Item 5 —	Other Information	32
Item 6 —	Exhibits	33
Signatures		34

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OSI SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(amounts in thousands, except share amounts and par value)


	June 30,		March 31,
	2022		2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	64,202	$	65,622
Accounts receivable, net		307,973		300,663
Inventories		333,907		371,795
Prepaid expenses and other current assets		40,062		40,454
Total current assets		746,144		778,534
Property and equipment, net		109,684		109,139
Goodwill		336,357		346,716
Intangible assets, net		138,370		140,192
Other assets		112,595		108,722
Total assets	$	1,443,150	$	1,483,303
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Bank lines of credit	$	60,000	$	215,000
Current portion of long-term debt		244,575		8,080
Accounts payable		125,204		127,255
Accrued payroll and related expenses		46,379		48,287
Advances from customers		19,917		33,841
Other accrued expenses and current liabilities		117,879		117,950
Total current liabilities		613,954		550,413
Long-term debt		48,668		138,190
Deferred income taxes		11,112		11,794
Other long-term liabilities		130,992		115,989
Total liabilities		804,726		816,386
Commitments and contingencies (Note 10)
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value— 10,000,000 shares authorized; no shares issued or outstanding		—		—
Common stock, $0.001 par value—100,000,000 shares authorized; issued and outstanding, 16,870,050 shares at June 30, 2022 and 16,727,121 shares at March 31, 2023		17		17
Retained earnings		663,869		693,576
Accumulated other comprehensive loss		(25,462)		(26,676)
Total stockholders’ equity		638,424		666,917
Total liabilities and stockholders’ equity	$	1,443,150	$	1,483,303

See accompanying notes to condensed consolidated financial statements.

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OSI SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(amounts in thousands, except per share data)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2023		2022		2023
Net revenues:
Products	$	221,857	$	223,724	$	634,446	$	637,563
Services		68,620		79,165		211,969		228,994
Total net revenues		290,477		302,889		846,415		866,557
Cost of goods sold:
Products		150,311		156,534		432,277		458,197
Services		37,308		42,569		112,177		120,870
Total cost of goods sold		187,619		199,103		544,454		579,067
Gross profit		102,858		103,786		301,961		287,490
Operating expenses:
Selling, general and administrative		57,813		53,707		170,015		161,148
Research and development		15,150		14,852		44,944		43,848
Impairment, restructuring and other charges, net		1,469		890		4,810		4,366
Total operating expenses		74,432		69,449		219,769		209,362
Income from operations		28,426		34,337		82,192		78,128
Interest and other expense, net		(2,301)		(5,727)		(6,534)		(14,339)
Other income, net		27,373		—		27,373		—
Income before income taxes		53,498		28,610		103,031		63,789
Provision for income taxes		(10,763)		(6,802)		(21,447)		(14,392)
Net income	$	42,735	$	21,808	$	81,584	$	49,397
Earnings per share:
Basic	$	2.45	$	1.30	$	4.60	$	2.93
Diluted	$	2.41	$	1.27	$	4.52	$	2.88
Shares used in per share calculation:
Basic		17,417		16,809		17,734		16,858
Diluted		17,709		17,184		18,036		17,151

See accompanying notes to condensed consolidated financial statements.

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OSI SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in thousands)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2023		2022		2023
Net income	$	42,735	$	21,808	$	81,584	$	49,397
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax		(1,981)		1,569		(4,907)		(3,309)
Net unrealized gain (loss) on investments and derivatives, net of tax		—		(1,430)		—		1,098
Other, net of tax		132		332		396		997
Other comprehensive income (loss)		(1,849)		471		(4,511)		(1,214)
Comprehensive income	$	40,886	$	22,279	$	77,073	$	48,183

See accompanying notes to condensed consolidated financial statements.

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OSI SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(amounts in thousands, except share data)


	Three Months Ended March 31, 2022
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—December 31, 2021	17,643,903	$	30,909	$	606,647	$	(17,408)	$	620,148
Vesting of RSUs	6,027		—		—		—		—
Shares issued under employee stock purchase program	32,105		2,307		—		—		2,307
Stock-based compensation expense	—		6,898		—		—		6,898
Repurchase of common stock	(635,962)		(39,904)		(11,648)		—		(51,552)
Taxes paid related to net share settlement of equity awards	(2,220)		(193)		—		—		(193)
Net income	—		—		42,735		—		42,735
Other comprehensive loss	—		—		—		(1,849)		(1,849)
Balance—March 31, 2022	17,043,853	$	17	$	637,734	$	(19,257)	$	618,494


	Three Months Ended March 31, 2023
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—December 31, 2022	16,819,609	$	2,530	$	672,371	$	(27,147)	$	647,754
Exercise of stock options	11,848		891		—		—		891
Vesting of RSUs	5,510		—		—		—		—
Shares issued under employee stock purchase program	30,652		2,072		—		—		2,072
Stock-based compensation expense	—		7,112		—		—		7,112
Repurchase of common stock	(138,469)		(12,362)		(603)		—		(12,965)
Taxes paid related to net share settlement of equity awards	(2,029)		(226)		—		—		(226)
Net income	—		—		21,808		—		21,808
Other comprehensive income	—		—		—		471		471
Balance—March 31, 2023	16,727,121	$	17	$	693,576	$	(26,676)	$	666,917

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	Nine Months Ended March 31, 2022
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—June 30, 2021	17,854,110	$	105,724	$	548,842	$	(14,746)	$	639,820
Exercise of stock options	164,612		311		—		—		311
Vesting of RSUs	335,099		—		—		—		—
Shares issued under employee stock purchase program	60,065		4,297		—		—		4,297
Stock-based compensation expense	—		20,986		—		—		20,986
Repurchase of common stock	(1,117,258)		(85,184)		(11,648)		—		(96,832)
Taxes paid related to net share settlement of equity awards	(252,775)		(19,354)		—		—		(19,354)
Adoption of ASU 2020-06 for convertible notes	—		(26,763)		18,956		—		(7,807)
Net income	—		—		81,584		—		81,584
Other comprehensive loss	—		—		—		(4,511)		(4,511)
Balance—March 31, 2022	17,043,853	$	17	$	637,734	$	(19,257)	$	618,494


	Nine Months Ended March 31, 2023
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—June 30, 2022	16,870,050	$	17	$	663,869	$	(25,462)	$	638,424
Exercise of stock options	19,614		1,330		—		—		1,330
Vesting of RSUs	312,038		—		—		—		—
Shares issued under employee stock purchase program	59,255		4,041		—		—		4,041
Stock-based compensation expense	—		21,528		—		—		21,528
Repurchase of common stock	(400,230)		(17,067)		(17,682)		—		(34,749)
Taxes paid related to net share settlement of equity awards	(133,606)		(9,832)		(2,008)		—		(11,840)
Net income	—		—		49,397		—		49,397
Other comprehensive loss	—		—		—		(1,214)		(1,214)
Balance—March 31, 2023	16,727,121	$	17	$	693,576	$	(26,676)	$	666,917

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OSI SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)


	Nine Months Ended March 31,
	2022		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	81,584	$	49,397
Adjustments to reconcile net income to net cash provided by operating activities, net of effects from acquisitions:
Depreciation and amortization		28,980		28,819
Stock-based compensation expense		20,986		21,528
Recovery of losses on accounts receivable		(3,836)		(4,890)
Deferred income taxes		1,448		942
Amortization of debt discount and issuance costs		1,045		196
Gain on sale of property and equipment		(27,373)		—
Other		(1,074)		(46)
Changes in operating assets and liabilities—net of business acquisitions:
Accounts receivable		10,613		13,248
Inventories		(53,766)		(37,860)
Prepaid expenses and other assets		8,010		(4,924)
Accounts payable		(11,000)		2,134
Accrued payroll and related expenses		(9,837)		2,151
Advances from customers		7,523		13,963
Other		(11,490)		(11,980)
Net cash provided by operating activities		41,813		72,678
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment		(10,293)		(12,691)
Proceeds from sale of property and equipment		32,304		309
Purchases of certificates of deposit		(2,201)		(4,940)
Proceeds from certificates of deposit		55		3,827
Acquisition of businesses, net of cash acquired		(14,132)		(4,616)
Payments for intangible and other assets		(12,320)		(12,275)
Net cash used in investing activities		(6,587)		(30,386)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on bank lines of credit		73,000		155,000
Proceeds from long-term debt		50,285		100,654
Payments on long-term debt		(40,893)		(247,818)
Proceeds from exercise of stock options and employee stock purchase plan		4,608		5,371
Payments of contingent consideration		(1,671)		(3,668)
Repurchases of common stock		(96,832)		(34,749)
Taxes paid related to net share settlement of equity awards		(19,354)		(11,840)
Net cash used in financing activities		(30,857)		(37,050)
Effect of exchange rate changes on cash		(1,703)		(3,822)
Net change in cash and cash equivalents		2,666		1,420
Cash and cash equivalents—beginning of period		80,613		64,202
Cash and cash equivalents—end of period	$	83,279	$	65,622
Supplemental disclosure of cash flow information:
Cash paid, net during the period for:
Interest	$	5,851	$	14,648
Income taxes	$	9,964	$	15,769

See accompanying notes to condensed consolidated financial statements.

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OSI SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements include the accounts of OSI Systems, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded in accordance with SEC rules and regulations and GAAP applicable to interim unaudited financial statements. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for audited annual financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. These unaudited condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 filed with the SEC. There have been no material changes to our significant accounting policies from those disclosed therein. The accompanying condensed consolidated balance sheet as of June 30, 2022 was derived from the Company's audited consolidated financial statements at that date. The results of operations for the three and nine months ended March 31, 2023 are not necessarily indicative of the operating results to be expected for the full 2023 fiscal year or any future periods.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales, costs of sales and expenses during the reporting period. The most significant of these estimates and assumptions for our company relate to contract revenue, fair values of assets acquired and liabilities assumed in business combinations, values for inventories reported at lower of cost or net realizable value, stock-based compensation expense, income taxes, accrued warranty costs, and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. Due to the inherent uncertainty involved in making estimates, our actual amounts reported in future periods could differ materially from these estimates.

Earnings Per Share Computations

We compute basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. We compute diluted earnings per share by dividing net income available to common stockholders by the sum of the weighted average number of common shares and dilutive potential common shares outstanding during the period. Potential common shares consist of the shares issuable upon the exercise of stock options and restricted stock unit awards under the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2023		2022		2023
Net income available to common stockholders	$	42,735	$	21,808	$	81,584	$	49,397
Weighted average shares outstanding—basic		17,417		16,809		17,734		16,858
Dilutive effect of equity awards		292		375		302		293
Weighted average shares outstanding—diluted		17,709		17,184		18,036		17,151
Basic earnings per share	$	2.45	$	1.30	$	4.60	$	2.93
Diluted earnings per share	$	2.41	$	1.27	$	4.52	$	2.88
Shares excluded from diluted earnings per share due to their anti-dilutive effect		211		60		62		75

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Cash and Cash Equivalents

We consider all highly liquid investments with maturities of three months or less as of the acquisition date to be cash equivalents.

Our cash and cash equivalents totaled $65.6 million at March 31, 2023. Of this amount, approximately 81% was held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were held primarily by our subsidiaries in the United Kingdom, India, Singapore, Malaysia and Canada, and to a lesser extent in Mexico, Indonesia, Albania and Australia. We have cash holdings in financial institutions that exceed insured limits for such financial institutions; we mitigate this risk, however, by utilizing international financial institutions of high credit quality.

Fair Value of Financial Instruments

Our financial instruments consist primarily of cash and cash equivalents, insurance company contracts, accounts receivable, accounts payable, debt instruments, an interest rate swap contract and foreign currency forward contracts. The carrying values of financial instruments, other than long-term debt instruments and the interest rate swap contract, are representative of their fair values due to their short-term maturities. The carrying values of our long-term debt instruments are considered to approximate their fair values because the interest rates of these instruments are variable or comparable to current rates for financing available to us. The fair values of our foreign currency forward contracts were not significant as of June 30, 2022 and March 31, 2023.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Level 1 category includes assets and liabilities measured at quoted prices in active markets for identical assets and liabilities. The Level 2 category includes assets and liabilities measured from observable inputs other than quoted market prices. The Level 3 category includes assets and liabilities for which valuation inputs are unobservable and significant to the fair value measurement. Our contingent payment obligations related to acquisitions, which are further discussed in Note 10 to the condensed consolidated financial statements, are in the Level 3 category for valuation purposes.

The fair values of our financial assets and liabilities are categorized as follows (in thousands):


	June 30, 2022								March 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets—Insurance company contracts	$	—	$	40,284	$	—	$	40,284	$	—	$	43,471	$	—	$	43,471
Assets – Interest rate swap contract	$	—	$	—	$	—	$	—	$	—	$	1,641	$	—	$	1,641
Liabilities—Convertible debt	$	—	$	242,302	$	—	$	242,302	$	—	$	—	$	—	$	—
Liabilities—Contingent consideration	$	—	$	—	$	28,212	$	28,212	$	—	$	—	$	20,060	$	20,060

Derivative Instruments and Hedging Activity

Our use of derivatives consists of foreign currency forward contracts and an interest rate swap agreement. The foreign currency forward contracts are utilized to partially mitigate certain balance sheet exposures or used as a net investment hedge to protect against potential changes resulting from short-term foreign currency fluctuations. These contracts have original maturities of up to three months. We also manage our risk to changes in interest rates using derivative instruments. We use fixed interest rate swaps to effectively convert a portion of the variable interest rate payments to fixed interest rate payments. We do not use hedging instruments for speculative purposes.

The net gains or losses from our foreign currency forward contracts, which are not designated as hedge instruments, are reported in the consolidated statements of operations. The amounts reported in the consolidated statements of operations for the three and nine months ended March 31, 2022 and 2023 were not significant. The fair value of our foreign currency forward contracts is estimated using a standard valuation model and market-based observable inputs over the contractual term. Unrealized gains are recognized as assets and unrealized losses are recognized as liabilities. As of June 30, 2022 and March 31, 2023, we held foreign currency forward contracts with notional amounts totaling $22.9 million and $19.8 million, respectively. Unrealized gains and losses from our foreign currency forward contracts as of March 31, 2022 and 2023 were not significant.

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The interest rate swap agreement was entered into to improve the predictability of cash flows from interest payments related to our variable, Secured Overnight Financing Rate (“SOFR”) based debt. The interest rate swap matures in December 2026. The interest rate swap is considered an effective cash flow hedge, and as a result, the net gains or losses on such instrument are reported as a component of other comprehensive income (loss) in the consolidated financial statements and are reclassified as net income when the underlying hedged interest impacts earnings. A qualitative and quantitative assessment over the hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate that the hedge may no longer be highly effective.

As of June 30, 2022 and March 31, 2023, the notional amount of the derivative instruments designated as an interest rate swap hedge was $0 and $175 million, respectively. The fair value of the interest rate swap contract as of March 31, 2023 was $1.6 million and is recorded in Other assets within the condensed consolidated balance sheet.

The effect of the cash flow hedges on other comprehensive income (loss) and earnings for the periods presented was as follows:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2023		2022		2023
Total interest and other expense, net presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded	$	(2,301)	$	(5,727)	$	(6,534)	$	(14,339)
Gain (loss) recognized in other comprehensive income (loss)		—		(1,430)		—		1,098
Amount reclassified from accumulated other comprehensive income (loss) to interest expense, net		—		(558)		—		(587)

Recently Adopted Accounting Pronouncement

Contract Assets and Contract Liabilities from Revenue Contracts with Customers in a Business Combination

In October 2021, the FASB issued Accounting Standards Update 2021-08, an accounting standard update to improve the accounting for contract assets and contract liabilities from revenue contracts with customers in a business combination (Topic 805). This amendment improves comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. We adopted the new guidance effective January 1, 2022 using the prospective approach and applied the amendments to the business combinations that occurred during the year ended June 30, 2022 and the nine months ended March 31, 2023. The adoption of ASU 2021-08 did not have a material impact on our consolidated financial statements.

2. Business Combinations

Under Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”), the acquisition method of accounting requires us to record assets acquired less liabilities assumed from an acquisition at their estimated fair values at the date of acquisition. Any excess of the total estimated purchase price over the estimated fair value of the net assets acquired should be recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customers, acquired technology, trade names, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions which are believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is up to one year from the acquisition date, as additional information that existed at the acquisition date becomes available for preliminary estimates, we may record adjustments to the preliminary assets acquired and liabilities assumed. Any adjustments subsequent to the conclusion of such measurement period are reflected in reported earnings.

Fiscal Year 2023 Business Acquisitions

In February 2023, we (through our Healthcare division) acquired a privately held provider of software and solutions for approximately $2.1 million plus up to $5 million in potential contingent consideration. The acquisition was financed with cash on hand.

Through our Security division, we acquired (i) in December 2022 certain assets of a provider of baggage and parcel inspection systems for approximately $1.6 million and (ii) in August 2022 a privately held provider of training software and solutions for approximately $1.9 million plus an immaterial amount of potential contingent consideration. These acquisitions were financed with cash on hand.

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Fiscal Year 2022 Business Acquisitions

In February 2022, we (through our Security division) acquired a privately held provider of intelligent inspection, sensory, and recognition solutions for approximately $14 million plus up to $25 million in potential contingent consideration. The acquisition was financed with cash on hand and borrowings under our revolving bank line of credit.

We (through our Security division) also acquired in February 2022 a privately held sales and services company for approximately $1.1 million, plus an immaterial amount of potential contingent consideration. The acquisition was financed with cash on hand.

These business acquisitions, individually and in aggregate, were not material to our consolidated financial statements. Accordingly, pro forma historical results of operations and other disclosures related to these businesses have not been presented.

3. Balance Sheet Details

The following tables set forth details of selected balance sheet accounts (in thousands):


	June 30,		March 31,
Accounts receivable, net	2022		2023
Accounts receivable	$	326,849	$	314,121
Less allowance for doubtful accounts		(18,876)		(13,458)
Total	$	307,973	$	300,663


	June 30,		March 31,
Inventories	2022		2023
Raw materials	$	213,290	$	233,458
Work-in-process		46,873		63,181
Finished goods		73,744		75,156
Total	$	333,907	$	371,795


	June 30,		March 31,
Property and equipment, net	2022		2023
Land	$	15,028	$	15,676
Buildings, civil works and improvements		47,309		49,023
Leasehold improvements		11,599		13,924
Equipment and tooling		128,425		134,078
Furniture and fixtures		3,592		3,543
Computer equipment		21,208		23,061
Computer software		25,153		26,757
Computer software implementation in process		9,422		9,344
Construction in process		5,283		3,894
Total		267,019		279,300
Less accumulated depreciation and amortization		(157,335)		(170,161)
Property and equipment, net	$	109,684	$	109,139

Depreciation and amortization expense for property and equipment was $5.4 million and $4.9 million for the three months ended March 31, 2022 and 2023, respectively, and $16.0 million and $14.6 million for the nine months ended March 31, 2022 and 2023, respectively.

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4. Goodwill and Intangible Assets

The changes in the carrying value of goodwill by segment for the nine-month period ended March 31, 2023 were as follows (in thousands)


					Optoelectronics
					And
	Security		Healthcare		Manufacturing
	Division		Division		Division		Consolidated
Balance as of June 30, 2022	$	225,555	$	43,187	$	67,615	$	336,357
Goodwill acquired or adjusted during the period		5,659		5,050		—		10,709
Foreign currency translation adjustment		48		44		(442)		(350)
Balance as of March 31, 2023	$	231,262	$	48,281	$	67,173	$	346,716

Intangible assets consisted of the following (in thousands):