Novanta Inc.

What they do

Novanta describes itself as a trusted technology partner to medical and advanced technology equipment manufacturers. It sells into medical and advanced industrial end markets, with products spanning photonics, motion control and medical consumables and components, and manufacturing FDA-registered products regionally. The company is incorporated in New Brunswick, Canada, is headquartered at 125 Middlesex Turnpike, Bedford, Massachusetts, and trades on Nasdaq as NOVT.

Revenue drivers

• Minimally invasive surgery and medical consumables — Following the Riverpoint Medical acquisition, management says recurring medical consumables roughly doubled to approximately 25% of sales on an annualized basis, and medical end-market exposure rose to approximately 60% of revenue.
• Photonics and advanced industrial products — The company sells precision photonics and related components into the advanced industrial end market; management references the Purchasing Managers Index as a possible indicator of general economic conditions affecting these sales.
• Motion control and precision components — Novanta supplies motion control and precision component products into medical and advanced technology equipment applications, alongside photonics and medical consumables, per the segment description in the 10-K business section.

Recent performance

Second quarter 2026 GAAP revenue was $265.8 million, up 10.3% year over year from $241.0 million, including a $2.4 million favorable foreign currency impact; organic growth was 9.3%. GAAP net income was $12.5 million, or $0.30 diluted EPS, versus $4.5 million and $0.12 a year earlier. Adjusted EBITDA rose 16.4% to $60.7 million, a 22.8% margin, and adjusted diluted EPS rose 17.1% to $0.89. Operating cash flow was $64.9 million for the quarter and $116.5 million year-to-date. Full-year 2025 revenue was $980.6 million with net income of $53.8 million and diluted EPS of $1.47.

Strategy

Management points to bookings, backlog, new product revenue and commercial execution in secular growth segments as the basis for expected organic growth. The strategy includes expanding into minimally invasive surgery through acquisitions — the Riverpoint Medical deal closed recently and is expected to be immediately accretive to revenue growth, gross margins, EBITDA margins and EPS. Novanta is also emphasizing a regional manufacturing strategy for FDA-registered products. The company frames these moves as adding an additional engine for growth and profitability.

Risks

• Acquisition integration and accretion risk — The expected immediate accretion from Riverpoint Medical to revenue growth, gross margins, EBITDA margins and EPS depends on successful integration and realization of the stated benefits.
• End-market cyclicality — The company explicitly links sales into the advanced industrial end market to general economic conditions, citing the Purchasing Managers Index as a possible indicator.
• Foreign currency exposure — Second quarter 2026 revenue included a $2.4 million, or 1.0%, favorable year-over-year foreign exchange impact, showing reported results move with currency rates.
• Customer concentration — The forward-looking statement discussion in the 10-K flags the loss of sales, or significant reduction in orders from, any major customer as a factor that could materially affect results.

Outlook

For the third quarter of 2026, Novanta guides GAAP revenue to $300 million to $304 million, representing greater than 21% growth, with Adjusted EBITDA of $74 million to $77 million and Adjusted Diluted EPS guided in a range. Management cites accelerating momentum across the portfolio, strong bookings, a healthy backlog and new product contributions. It expects Riverpoint Medical to be immediately accretive to revenue growth, gross margins, EBITDA margins and EPS.