Why OSI Systems Shares Got Crushed

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What: Shares of OSI Systems got crushed today, down by 17% at the low after the company provided an update on its TSA Show Cause Letter.

So what: Reports surfaced last November that the company was manipulating test results for its Rapiscan security units, while analysts defended the company at the time. OSI Systems will begin formal proceedings that will allow the company to provide information and communicate directly with Department of Homeland Security officials.

Now what: CEO Deepak Chopra reiterated confidence that OSI Systems will be able to clear its name as a responsible TSA vendor. OSI will now be able to prove its compliance with its obligations, but acknowledges some possible risks. There are three possible outcomes, the worst of which would be OSI Systems being debarred. The company also said there are restrictions on its ability to seek and/or accept additional government contracts.

Interested in more info on OSI Systems? Add it to your watchlist by clicking here.

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The article Why OSI Systems Shares Got Crushed originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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