NOVANTA INC
For the period ended Jul 3, 2026. Filed Aug 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 3, 2026 · Filed Aug 5, 2026
NOVT$135.15+2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-04-03; filed 2026-05-11.
0001193125-26-217064
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-07-03; filed 2026-08-05.
0001193125-26-335404
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 112 previous paragraphs and 140 current paragraphs.
71 unchanged; 34 reworded; 30 added; 5 removed; 2 previous and 5 current paragraphs rearranged.
Tables are not compared: 7 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (30)
Current report
Significant Events and Updates
Current report
Second Amendment to the Fourth Amended and Restated Credit Agreement
Current report
On May 15, 2026 (the “Second Amendment Effective Date”), we entered into the Second Amendment to the Fourth Amended and Restated Credit Agreement (the “Second Amendment” as amended, the “Credit Agreement”). The Second Amendment, among other things, amends the Credit Agreement to establish $200.0 million of delayed draw term loan commitments (the “Delayed Draw Term Loans”), which will be available for borrowing at the Company’s option for up to six months after the Second Amendment Effective Date. The Delayed Draw Term Loans will mature on June 27, 2030. The Second Amendment also resets the term loan and revolving commitment incremental capacity under the Credit Agreement to be measured from and after the Second Amendment Effective Date.
Current report
Issuance of Common Shares in Private Placement
Current report
On June 8, 2026, we entered into a securities purchase agreement with institutional and other accredited investors for a private placement of our common shares, which resulted in gross proceeds of approximately $300 million, before placement agent fees and offering expenses of $12.4 million. Under the agreement, investors purchased an aggregate of 2,142,857 common shares at $140.00 per share, representing approximately 5.7% of our common shares outstanding immediately following the closing. The placement closed on June 11, 2026, and we recorded net proceeds of approximately $287.6 million as an increase to additional paid-in capital.
Current report
Acquisition of Riverpoint Medical
Current report
On June 8, 2026, we entered into a definitive agreement to acquire Riverpoint Medical, a category leader in high-growth minimally invasive surgical consumables. On July 23, 2026, we completed the acquisition of all outstanding equity interests of the parent company of Riverpoint Medical for total upfront cash consideration of $1.2 billion, subject to customary closing and net working capital adjustments. In addition, the agreement provides for a milestone payment of $250.0 million payable on or before January 8, 2027.
Current report
We funded the purchase price through $616.0 million of borrowings under the revolving credit facility and delayed draw term loan facility of the Fourth Amended and Restated Credit Agreement, with the remainder funded from cash on hand.
Current report
Total revenue of $265.8 million for the three months ended July 3, 2026 increased $24.8 million, or 10.3%, from the prior year period primarily due to an increase in revenue in both the Automation Enabling Technologies and Medical Solutions segments. In addition, foreign currency exchange rates favorably impacted our revenue by $2.4 million, or 1.0%, for the three months ended July 3, 2026.
Current report
Operating income of $18.1 million for the three months ended July 3, 2026 increased $3.2 million, or 21.1%, from the prior year period. This increase was attributable to an increase in gross profit of $14.2 million, a decrease in research and development, and engineering expenses of $1.3 million and a decrease in amortization expenses of $0.5 million, partially offset by an increase in selling, general, and administrative expenses of $12.9 million.
Current report
Automation Enabling Technologies segment revenue for the three months ended July 3, 2026 increased $14.5 million, or 12.0%, versus the prior year period, due to an increase in sales of robotics and automation and precision manufacturing products.
Current report
Automation Enabling Technologies segment revenue for the six months ended July 3, 2026 increased $22.6 million, or 9.2%, versus the prior year period, due to an increase in sales of robotics and automation and precision manufacturing products.
Current report
Medical Solutions segment revenue for the three months ended July 3, 2026 increased $10.2 million, or 8.6%, versus the prior year period, due to an increase in sales of advanced surgery and precision medicine products.
Current report
Automation Enabling Technologies segment gross profit for the three months ended July 3, 2026 increased $13.4 million, or 23.0%, versus the prior year period, primarily due to an increase in both revenue and gross profit margin. Automation Enabling Technologies segment gross profit margin was 52.6% for the three months ended July 3, 2026, versus a gross profit margin of 47.8% for the prior year period. The increase in gross profit margin was primarily due to higher volumes, pricing, duty drawback and tariff refunds, and cost reduction actions, partially offset by material inflationary costs, tariffs, and factory redundancy costs associated with our regional manufacturing initiative.
Current report
Automation Enabling Technologies segment gross profit for the six months ended July 3, 2026 increased $16.8 million, or 14.3%, versus the prior year period, primarily due to an increase in both revenue and gross profit margin. Automation Enabling Technologies segment gross profit margin was 50.2% for the six months ended July 3, 2026, versus a gross profit margin of 48.0% for the prior year period. The increase in gross profit margin was primarily due to higher volumes, pricing, duty drawback and tariff refunds, and cost reduction actions, partially offset by material inflationary costs, tariffs, and factory redundancy costs associated with our regional manufacturing initiative.
Current report
R&D expenses were $47.2 million, or 9.0% of revenue, during the six months ended July 3, 2026, versus $48.5 million, or 10.2% of revenue, during the prior year period. The decrease in R&D expenses, both in total dollars and as a percentage of revenue, was primarily driven by lower spending on R&D projects.
Current report
SG&A expenses were $114.4 million, or 21.8% of revenue, during the six months ended July 3, 2026, versus $92.7 million, or 19.5% of revenue, during the prior year period. The increase in SG&A expenses was primarily driven by higher variable employee compensation and costs associated with the planning and design phase of our financial and operation system implementation.
Current report
We recorded restructuring, acquisition, and related costs of $12.5 million during the three months ended July 3, 2026, versus $12.6 million during the prior year period. The decrease in restructuring, acquisition and related costs was primarily due to a decrease in restructuring costs of $5.5 million, offset by an increase in acquisition and related costs of $5.5 million.
Current report
Automation Enabling Technologies segment operating income was $36.6 million, or 26.9% of revenue, during the three months ended July 3, 2026, versus $26.9 million, or 22.1% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $13.4 million, partially offset by an increase in SG&A expenses of $2.5 million, and an increase in restructuring, acquisition and related costs of $0.6 million.
Current report
Automation Enabling Technologies segment operating income was $67.7 million, or 25.3% of revenue, during the six months ended July 3, 2026, versus $58.4 million, or 23.8% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $16.8 million, partially offset by an increase in restructuring, acquisition and related costs of $4.3 million, and an increase in SG&A expenses of $3.2 million.
Current report
Medical Solutions segment operating income was $13.6 million, or 10.5% of revenue, during the three months ended July 3, 2026, versus $6.6 million, or 5.5% of revenue, during the prior year period. The increase in operating income was primarily due to a decrease in restructuring, acquisition and related costs of $5.4 million, a decrease in R&D expenses of $1.5 million, an increase in gross profit of $0.8 million and a decrease in amortization expense of $0.8 million, partially offset by an increase in SG&A expenses of $1.5 million.
Current report
Medical Solutions segment operating income was $30.3 million, or 11.8% of revenue, during the six months ended July 3, 2026, versus $20.7 million, or 9.0% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $7.0 million, a decrease in restructuring, acquisition and related costs of $4.2 million, and a decrease in R&D expenses of $1.2 million, partially offset by an increase in SG&A expenses of $3.1 million.
Current report
Unallocated costs for the six months ended July 3, 2026 increased $20.8 million versus the prior year period. The increase in operating loss was primarily driven by higher compensation costs, higher acquisition and related costs, and costs associated with the planning and design phase of our financial and operation system.
Current report
Foreign exchange transaction gains (losses) were $(0.8) million for the three months ended July 3, 2026 versus $(2.7) million for the prior year period. The decrease in net foreign exchange transaction losses was primarily due to changes in the value of the U.S. Dollar against the British Pound and Euro, and realized gains on foreign currency contracts.
Current report
Foreign exchange transaction gains (losses) were $(0.1) million for the six months ended July 3, 2026 versus $(3.1) million for the prior year period. The decrease in net foreign exchange transaction losses was primarily due to changes in the value of the U.S. Dollar against the British Pound and Euro, and realized gains on foreign currency contracts.
Current report
Our effective tax rate for the three months ended July 3, 2026 was 21.1%, versus 22.3% for the same period in the prior year. Our effective tax rate of 21.1% for the three months ended July 3, 2026 differs from the Canadian federal and provincial combined statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated U.S. tax benefits for Foreign-Derived Deduction Eligible Income (“FDDEI”), windfall from vesting of restricted stock units, U.K. patent box deductions and R&D tax credits; partially offset by non-deductible transaction-related and compensation expenses.
Current report
On May 15, 2026 (the “Second Amendment Effective Date”), we entered into an amendment (the “Second Amendment”) to the Fourth Amended and Restated Credit Agreement with existing lenders. The amendment establishes $200.0 million of secured delayed draw term loan commitments (“2026 Delayed Draw Term Loan Commitments”), which will be available for borrowing at our option for up to six months after the Second Amendment Effective Date. The delayed draw term loan commitments will mature on June 27, 2030 and shall bear interest at (i) the Base Rate (as defined in the Credit Agreement) plus a margin ranging from 0.00% to 0.75% per annum or (ii) SOFR, SONIA or EURIBOR, as applicable, plus a margin ranging between 1.00% and 1.75% per annum, in each case as determined by reference to our consolidated leverage ratio. In addition, we are obligated to pay a commitment fee on the undrawn 2026 Delayed Draw Term Loan Commitments. The delayed draw term loan commitments will amortize in equal quarterly installments commencing on or around the last business day of the fiscal quarter ending September 25, 2026 at a rate (i) in the case of such amortization payments made on or prior to June 25, 2027, an amount not less than 0.625% of the principal amount of all U.S. dollar term loans outstanding and (ii) in the case of such amortization payments made thereafter, at a rate not less than 1.25% of the principal amount of all U.S. dollar term loans outstanding. We incurred approximately $0.4 million of deferred financing costs in connection with the Second Amendment, which are recorded as a prepaid asset while the facility remains undrawn. Upon drawdown of the delayed draw term loan commitments, the deferred financing costs will be reclassified as a deferred financing asset on the consolidated balance sheet in accordance with ASC 470 and amortized over the remaining term of the Credit Agreement. As of July 3, 2026, we had not exercised any amounts under the delayed draw commitments.
Current report
On June 8, 2026, we entered into an amendment (the “Third Amendment”) to the Fourth Amended and Restated Credit Agreement. The Third Amendment, among other things, (i) introduced a defined term for a specified acquisition, (ii) amends the interest rate applicable to loans under the Credit Agreement by widening the pricing margin by 0.25% if our consolidated leverage ratio exceeds 3.75 to 1.00 and (iii) amends the financial covenants under the Credit Agreement by (x) increasing the permitted consolidated leverage ratio to 4.00 to 1.00 or 4.50 to 1.00 for four consecutive quarters following a Designated Acquisition (as defined in the Credit Agreement) and (y) decreasing the permitted consolidated fixed charge coverage ratio to 1.00 to 1.00 for the four consecutive fiscal quarters following consummation of the specified acquisition. We incurred approximately $1.9 million of deferred financing costs in connection with the Third Amendment. These costs will be amortized over the remaining term of the Fourth Amended and Restated Credit Agreement.
Current report
Following the completion of the Riverpoint Medical acquisition on July 23, 2026, our total consolidated gross debt increased from $238.8 million as of July 3, 2026 to $854.8 million. As of July 23, 2026, we had approximately $434.0 million of remaining availability under our revolving credit facility.
Current report
(2) The minimum consolidated fixed charge coverage ratio shall be decreased to 1.00 for four consecutive quarters following a designated acquisition as defined in the Fourth Amended and Restated Credit Agreement.
Removed paragraphs (5)
Previous report
Revenue
Previous report
Automation Enabling Technologies segment revenue for the three months ended April 3, 2026 increased $8.1 million, or 6.6%, versus the prior year period, primarily due to an increase in demand in robotics and automation products.
Previous report
Automation Enabling Technologies segment operating income was $31.1 million, or 23.7% of revenue, during the three months ended April 3, 2026, versus $31.5 million, or 25.6% of revenue, during the prior year period. The decrease in operating income was primarily due to an increase in restructuring, acquisition, and related costs of $3.7 million, and an increase in SG&A expense of $0.7 million, partially offset by an increase in gross profit of $3.4 million.
Previous report
Medical Solutions segment operating income was $16.7 million, or 13.2% of revenue, during the three months ended April 3, 2026, versus $14.0 million, or 12.7% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $6.2 million, partially offset by an increase in SG&A expenses of $1.6 million, an increase in restructuring, acquisition, and related costs of $1.1 million, and an increase in amortization expenses of $0.5 million.
Previous report
Our effective tax rate for the three months ended March 28, 2025 of 19.7% differs from the Canadian federal and provincial combined statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated deductions for Foreign Derived Intangible Income, U.K. patent box deductions and R&D tax credits, partially offset by disallowed compensation deductions, withholding taxes, non-deductible expenses and an estimated Pillar Two inclusion.
Reworded paragraphs (34)
Previous wording
Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various important factors, including, but not limited to, the following: economic and political conditions and the effects of these conditions on our customers’ businesses, capital expenditures and level of business activities; our dependence upon our ability to respond to fluctuations in product demand; our ability to continuously innovate, to introduce new products in a timely manner, and to manage transitions to new product innovations effectively; customer order timing and other similar factors; disruptions or breaches in security of our or our third-party providers’ information technology systems; risks associated with our operations in foreign countries; our increased use of outsourcing in foreign countries; risks associated with increased outsourcing of components manufacturing; our exposure to increased tariffs, trade restrictions or taxes on our products; our ability to contain or reduce costs; violations of our intellectual property rights and our ability to protect our intellectual property against infringement by third parties; risk of losing our competitive advantage; our failure to successfully integrate recent and future acquisitions into our business; our ability to attract and retain key personnel; our restructuring and realignment activities; product defects or problems integrating our products with other vendors’ products; disruptions in the supply of certain key components and other goods from our suppliers; our failure to accurately forecast component and raw material requirements leading to additional costs and significant delays in shipments; production difficulties and product delivery delays or disruptions; our exposure to extensive medical device regulations, which may impede or hinder the approval, certification or sale of our products and, in some cases, may ultimately result in an inability to obtain approval or certification of certain products or may result in the recall or seizure of previously approved or certified products; potential penalties for violating foreign and U.S. federal and state healthcare laws and regulations; impact of healthcare industry cost containment and healthcare reform measures; changes in governmental regulations related to our business or products; actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards, and other requirements; our failure to implement new information technology systems successfully; changes in foreign currency rates; our failure to realize the full value of our intangible assets; our reliance on original equipment manufacturer customers; the loss of sales, or significant reduction in orders from, any major customers; increasing scrutiny and changing expectations from investors, customers, governments and other stakeholders and third parties with respect to corporate sustainability policies a…
Excerpt shortened here; the source contains the full paragraph.
Current wording
These forward-looking statements are neither promises nor guarantees. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various important factors, including, but not limited to, the following: economic and political conditions and the effects of these conditions on our businesses and on our customers’ businesses, capital expenditures and level of business activities; our dependence upon our ability to respond to fluctuations in product demand; our ability to continuously innovate, to introduce new products in a timely manner, and to manage transitions to new product innovations effectively; customer order timing and other similar factors; disruptions or breaches in security of our or our third-party providers’ information technology systems; risks associated with our operations in foreign countries; our increased use of outsourcing in foreign countries; risks associated with increased outsourcing of components manufacturing; our exposure to increased tariffs, trade restrictions or taxes on our products; our ability to contain or reduce costs; violations of our intellectual property rights and our ability to protect our intellectual property against infringement by third parties; risk of losing our competitive advantage; our failure to successfully integrate recent and future acquisitions into our business or to realize the anticipated benefits or synergies from those acquisitions; the accuracy of financial and other information regarding Riverpoint Medical on which we relied in connection with the acquisition and our related financial projections, which was not subject to the same accounting oversight and controls as our own historical financial information; our ability to accurately forecast Riverpoint Medical's future financial performance and our ability to maintain compliance with financial covenants under our credit facility, including our leverage ratio, which depends in part on the future financial performance of the combined company; our ability to attract and retain key personnel; our restructuring and realignment activities; product defects or problems integrating our products with other vendors’ products; disruptions in the supply of certain key components and other goods from our suppliers; our failure to accurately forecast component and raw material requirements leading to additional costs and significant delays in shipments; production difficulties and product delivery delays or disruptions; our exposure to extensive medical device regulations, which may impede or hinder the approval, certification or sale of our products and, in some cases, may ultimately result in an inability to obtain approval or certification of certain products or may result in the recall or seizure of previously approved or certified products; potential penalties for violating foreign and U.S. federal and state healthcare laws and regulations; impact of healthcare industry cost containment an…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
For the three months ended April 3, 2026, the medical market accounted for approximately 53% of our revenue. Revenue from our products sold to the medical market is generally affected by hospital, life science, and other healthcare provider capital spending, growth rates of surgical procedures, changes in regulatory requirements and laws, demand level for life science automation technology, aggregation of purchasing by healthcare networks, changes in technology requirements, timing of OEM customers’ product development and new product launches, changes in customer or patient preferences, and general demographic trends.
Current wording
For the six months ended July 3, 2026, the medical market accounted for approximately 52% of our revenue. Revenue from our products sold to the medical market is generally affected by hospital, life science, and other healthcare provider capital spending, growth rates of surgical procedures, changes in regulatory requirements and laws, demand level for life science automation technology, aggregation of purchasing by healthcare networks, changes in technology requirements, timing of OEM customers’ product development and new product launches, changes in customer or patient preferences, and general demographic trends.
Previous wording
For the three months ended April 3, 2026, the advanced industrial market accounted for approximately 47% of our revenue. Revenue from our products sold to the advanced industrial market is affected by a number of factors, including changing technology requirements and preferences of our customers, productivity or quality investments in a manufacturing environment, the financial conditions of our customers, changes in regulatory requirements and laws, and general economic conditions. We believe that the PMI on manufacturing activities specific to different regions around the world may provide an indication of the impact of general economic conditions on our sales into the advanced industrial market.
Current wording
For the six months ended July 3, 2026, the advanced industrial market accounted for approximately 48% of our revenue. Revenue from our products sold to the advanced industrial market is affected by a number of factors, including changing technology requirements and preferences of our customers, productivity or quality investments in a manufacturing environment, the financial conditions of our customers, changes in regulatory requirements and laws, and general economic conditions. We believe that the PMI on manufacturing activities specific to different regions around the world may provide an indication of the impact of general economic conditions on our sales into the advanced industrial market.
Previous wording
The global economy has continued to face significant challenges, including inflation, supply chain disruptions, business slowdowns, labor shortages, market volatility, and evolving U.S. trade policies such as tariffs and retaliatory measures. Tariffs imposed by the U.S. government on imports from certain countries, including China, have increased our cost of revenue and contributed to gross margin compression in both of our reportable segments during the three months ended April 3, 2026. Retaliatory tariffs and trade restrictions imposed by other countries have further increased the cost of cross-border commerce. The scope, duration, and ultimate impact of current and potential future tariff actions remain uncertain and difficult to predict, and the Company may not be able to fully offset the effects through pricing, sourcing, or operational adjustments.
Current wording
The global economy has continued to face significant challenges, including inflation, supply chain disruptions, business slowdowns, labor shortages, market volatility, and evolving U.S. trade policies such as tariffs and retaliatory measures. Tariffs imposed by the U.S. government on imports from certain countries, including China, continue to put pressure on our cost to serve customers. Retaliatory tariffs and trade restrictions imposed by other countries have further increased the cost of cross-border commerce. The scope, duration, and ultimate impact of current and potential future tariff actions remain uncertain and difficult to predict, and the Company may not be able to fully offset the effects through pricing, sourcing, or operational adjustments.
Previous wording
Results of Operations for the Three Months Ended April 3, 2026 Compared with the Three Months Ended March 28, 2025
Current wording
Results of Operations for the Three and Six Months Ended July 3, 2026 Compared with the Three and Six Months Ended June 27, 2025
Previous wording
Total revenue of $257.7 million for the three months ended April 3, 2026 increased $24.3 million, or 10.4%, from the prior year period primarily due to revenue from the 2025 acquisition, an increase in revenue in the Medical Solutions segment excluding the impact of the 2025 acquisition and an increase in revenue in the Automation Enabling Technologies segment. The net effect of our acquisition resulted in an increase in revenue of $9.0 million, or 3.8%. In addition, foreign currency exchange rates favorably impacted our revenue by $8.2 million, or 3.5%, for the three months ended April 3, 2026.
Current wording
Total revenue of $523.5 million for the six months ended July 3, 2026 increased $49.1 million, or 10.3%, from the prior year period primarily due to revenue from the 2025 acquisition, an increase in revenue in the Medical Solutions segment excluding the impact of the 2025 acquisition and an increase in revenue in the Automation Enabling Technologies segment. The net effect of our acquisition resulted in an increase in revenue of $9.0 million, or 1.9%. In addition, foreign currency exchange rates favorably impacted our revenue by $10.6 million, or 2.2%, for the six months ended July 3, 2026.
Previous wording
Operating income of $27.5 million for the three months ended April 3, 2026 decreased $4.9 million, or 15.1%, from the prior year period. This decrease was attributable to an increase in selling, general and administrative expenses of $8.8 million, and an increase in restructuring, acquisition, and related costs of $5.1 million, partially offset by an increase in gross profit of $9.2 million.
Current wording
Operating income of $45.6 million for the six months ended July 3, 2026 decreased $1.7 million, or 3.7%, from the prior year period. This decrease was primarily attributable to an increase in selling, general and administrative expenses of $21.7 million, and an increase in restructuring, acquisition, and related costs of $5.0 million, partially offset by an increase in gross profit of $23.4 million and a decrease in research and development, and engineering expenses of $1.3 million.
Previous wording
Basic earnings per common share (“Basic EPS”) of $0.52 for the three months ended April 3, 2026 decreased $0.07 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $0.51 for the three months ended April 3, 2026 decreased $0.08 from the prior year period. The decreases were primarily due to an increase in the weighted average common shares outstanding as a result of a prior year tangible equity unit offering.
Current wording
Basic earnings per common share (“Basic EPS”) of $0.31 for the three months ended July 3, 2026 increased $0.19 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $0.30 for the three months ended July 3, 2026 increased $0.18 from the prior year period. The increases were primarily due to an increase in net income, partially offset by the increase in the weighted average common shares outstanding as a result of the private placement and the prior year tangible equity unit offering.
Previous wording
Medical Solutions segment revenue for the three months ended April 3, 2026 increased $16.3 million, or 14.8%, versus the prior year period, primarily due to the net impact of $9.0 million revenue contributions from the 2025 acquisition, and an increase in sales of advanced surgery products.
Current wording
Medical Solutions segment revenue for the six months ended July 3, 2026 increased $26.5 million, or 11.5%, versus the prior year period, primarily due to the net impact of $9.0 million revenue contributions from the 2025 acquisition, an increase in sales of advanced surgery products, and an increase in sales of precision medicine products excluding the 2025 acquisition impact.
Previous wording
Gross profit and gross profit margin can be influenced by a number of factors, including product mix, pricing, volume, manufacturing efficiencies and utilization, costs for raw materials and outsourced manufacturing, headcount, inventory obsolescence and fair value adjustments, warranty expenses, and intangible amortization.
Current wording
Gross profit and gross profit margin can be influenced by a number of factors, including product mix, pricing, volume, manufacturing efficiencies and utilization, costs for raw materials and outsourced manufacturing, headcount, inventory obsolescence, fair value adjustments, warranty expenses, logistics and trade related costs, and intangible amortization.
Previous wording
Medical Solutions segment gross profit for the three months ended April 3, 2026 increased $6.2 million, or 13.5%, versus the prior year period, primarily due to an increase in revenue. Medical Solutions segment gross profit margin was 41.3% for the three months ended April 3, 2026, versus a gross profit margin of 41.7% for the prior year period. The decrease in gross profit margin was primarily due to higher material costs, increased tariff costs, as well as changes in product mix.
Current wording
Medical Solutions segment gross profit for the three months ended July 3, 2026 increased $0.8 million, or 1.6%, versus the prior year period, primarily due to an increase in revenue. Medical Solutions segment gross profit margin was 38.8% for the three months ended July 3, 2026, versus a gross profit margin of 41.5% for the prior year period. The decrease in gross profit margin was primarily due to changes in product mix and temporary cost increases incurred as part of our operational transformation.
Previous wording
Automation Enabling Technologies segment gross profit for the three months ended April 3, 2026 increased $3.4 million, or 5.7%, versus the prior year period, primarily due to an increase in revenue. Automation Enabling Technologies segment gross profit margin was 47.8% for the three months ended April 3, 2026, versus a gross profit margin of 48.2% for the prior year period. The decrease in gross profit margin is primarily due to higher material costs, increased freight and tariff costs, as well as temporary cost increases incurred as part of our regionalized manufacturing strategy.
Current wording
Medical Solutions segment gross profit for the six months ended July 3, 2026 increased $7.0 million, or 7.4%, versus the prior year period, primarily due to an increase in revenue. Medical Solutions segment gross profit margin was 40.0% for the six months ended July 3, 2026, versus a gross profit margin of 41.6% for the prior year period. The decrease in gross profit margin was primarily due to changes in product mix and temporary cost increases incurred as part of our operational transformation.
Previous wording
Research and Development and Engineering (“R&D”) expenses are primarily comprised of employee compensation related expenses and cost of materials for R&D projects. R&D expenses were $23.3 million, or 9.0% of revenue, during the three months ended April 3, 2026, versus $23.2 million, or 10.0% of revenue, during the prior year period.
Current wording
Research and Development and Engineering (“R&D”) expenses are primarily comprised of employee compensation related expenses and cost of materials for R&D projects. R&D expenses were $24.0 million, or 9.0% of revenue, during the three months ended July 3, 2026, versus $25.3 million, or 10.5% of revenue, during the prior year period. The decrease in R&D expenses, both in total dollars and as a percentage of revenue, was primarily driven by lower spending on R&D projects.
Previous wording
Selling, general and administrative (“SG&A”) expenses include costs for sales and marketing, sales administration, finance, human resources, legal, information systems, and executive management functions. SG&A expenses were $54.4 million, or 21.1% of revenue, during the three months ended April 3, 2026, versus $45.6 million, or 19.5% of revenue, during the prior year period. The increase in SG&A expenses, both in total dollars and as a percentage of revenue, was primarily driven by higher employee compensation, costs associated with the planning and design phase of our financial and operation system implementation and the impact of our prior year acquisition.
Current wording
Selling, general and administrative (“SG&A”) expenses include costs for sales and marketing, sales administration, finance, human resources, legal, information systems, and executive management functions. SG&A expenses were $60.0 million, or 22.6% of revenue, during the three months ended July 3, 2026, versus $47.1 million, or 19.5% of revenue, during the prior year period. The increase in SG&A expenses, both in total dollars and as a percentage of revenue, was primarily driven by higher variable employee compensation and costs associated with the planning and design phase of our financial and operation system implementation.
Previous wording
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $5.8 million, or 2.2% of revenue, during the three months ended April 3, 2026, versus $5.6 million, or 2.4% of revenue, during the prior year period.
Current wording
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $6.4 million, or 2.4% of revenue, during the three months ended July 3, 2026, versus $6.9 million, or 2.9% of revenue, during the prior year period.
Previous wording
We recorded restructuring, acquisition, and related costs of $2.6 million during the three months ended April 3, 2026, versus $(2.5) million during the prior year period. The increase in restructuring, acquisition and related costs was primarily due to a gain recorded in the prior year on the sale of an owned facility and an increase in restructuring costs incurred in connection with the 2025 restructuring program.
Current wording
We recorded restructuring, acquisition, and related costs of $15.1 million during the six months ended July 3, 2026, versus $10.1 million during the prior year period. The increase in restructuring, acquisition and related costs was primarily due to an increase in acquisition and related costs of $6.0 million.
Previous wording
Unallocated costs primarily represent costs of corporate and shared services functions that are not allocated to the operating segments, including certain restructuring and most acquisition costs. These costs for the three months ended April 3, 2026 increased $7.2 million versus the prior year period. The increase in operating loss was primarily driven by costs associated with planning and design phase of our financial and operation system implementation and higher employee compensation.
Current wording
Unallocated costs primarily represent costs of corporate and shared services functions that are not allocated to the operating segments, including certain restructuring and most acquisition costs. These costs for the three months ended July 3, 2026 increased $13.6 million versus the prior year period. The increase in operating loss was primarily driven by higher compensation costs, higher acquisition and related costs, and costs associated with the planning and design phase of our financial and operation system implementation.
Previous wording
Net interest expense was $1.8 million for the three months ended April 3, 2026, versus $5.6 million for the prior year period. The decrease in net interest expense was primarily due to lower interest expense as a result of reduced average debt levels and higher interest income. For the three months ended April 3, 2026, the weighted average interest rate on our senior credit facilities was 5.81%, versus 5.77% in the prior year period.
Current wording
Net interest expense was $1.1 million for the three months ended July 3, 2026, versus $5.8 million for the prior year period. The decrease in net interest expense was primarily due to lower interest expense as a result of reduced average debt levels and higher interest income. For the three months ended July 3, 2026, the weighted average interest rate on our senior credit facilities was 5.86%, versus 5.35% in the prior year period.
Previous wording
Net other expense was nominal for the three months ended April 3, 2026 and the three months ended March 28, 2025.
Current wording
Net other expense was nominal for the three and six months ended July 3, 2026 and the three and six months ended June 27, 2025.
Previous wording
Our effective tax rate for the three months ended April 3, 2026 was 19.9%, versus 19.7% for the same period in the prior year. Our effective tax rate of 19.9% for the three months ended April 3, 2026 differs from the Canadian federal and provincial combined statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated U.S. tax benefits for Foreign-Derived Deduction Eligible Income (“FDDEI”) (formerly FDII), a decrease in the Canadian valuation allowance, R&D tax credits, and U.K. patent box deductions; partially offset by various non-deductible transaction-related and compensation expenses, Pillar Two tax, and uncertain tax position accruals.
Current wording
Our effective tax rate for the six months ended July 3, 2026 was 20.4%, versus 20.2% for the same period in the prior year. Our effective tax rate of 20.4% for the six months ended July 3, 2026 differs from the Canadian federal and provincial combined statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated U.S. tax benefits for Foreign-Derived Deduction Eligible Income (“FDDEI”), U.K. patent box deductions and R&D tax credits; partially offset by non-deductible transaction-related and compensation expenses.
Previous wording
On December 12, 2022, the EU member states agreed to implement the Organisation for Economic Co-operation and Development’s (“OECD”) Pillar Two Model Rules. These rules, which establish a global minimum corporate income tax rate of 15%, have been enacted or proposed legislation in numerous countries worldwide, including most of the jurisdictions in which we operate. We qualify for the transitional safe harbor rules in the majority of jurisdictions in which we operate and are therefore not subject to Pillar Two global minimum tax in those jurisdictions. Where we cannot apply the safe harbor rules, we have estimated the impact of this minimum tax in our effective tax rate analysis. We continue to monitor any legislative developments closely.
Current wording
On December 12, 2022, the EU member states agreed to implement the Organisation for Economic Co-operation and Development’s (“OECD”) Pillar Two Model Rules. These rules, which establish a global minimum corporate income tax rate of 15%, have been enacted in most of the jurisdictions in which we operate. We qualify for the transitional safe harbor rules in a majority of jurisdictions in which we operate and are therefore not subject to Pillar Two global minimum tax in those jurisdictions. Where we cannot apply the safe harbor rules, we have estimated the impact of this minimum tax in our effective tax rate analysis. We continue to monitor any legislative developments closely.
Previous wording
As of April 3, 2026, $84.6 million of our $388.8 million cash and cash equivalents was held by subsidiaries outside of Canada and the U.S. Generally, our intent is to use cash held in these foreign subsidiaries to fund our local operations or acquisitions by those local subsidiaries and to pay down borrowings under our Senior Credit Facilities. Approximately $71.4 million of our outstanding borrowings under our Senior Credit Facilities were held in our subsidiaries outside of Canada and the U.S. as of April 3, 2026. Additionally, we may use intercompany loans to address short-term cash flow needs for various subsidiaries.
Current wording
As of July 3, 2026, $94.8 million of our $718.7 million cash and cash equivalents was held by subsidiaries outside of Canada and the U.S. Generally, our intent is to use cash held in these foreign subsidiaries to fund our local operations or acquisitions by those local subsidiaries and to pay down borrowings under our Senior Credit Facilities. Approximately $69.4 million of our outstanding borrowings under our Senior Credit Facilities were held in our subsidiaries outside of Canada and the U.S. as of July 3, 2026. Additionally, we may use intercompany loans to address short-term cash flow needs for various subsidiaries.
Previous wording
On November 5, 2025, the Company entered into an amendment (the “First Amendment”) to the Fourth Amended and Restated Credit Agreement. The First Amendment increases the maximum consolidated leverage ratio permitted thereunder to 3.75:1.00, with a step-up to 4.25:1.00 following a designated acquisition and revised the Company's consolidated leverage ratio definition (as defined in the Fourth Amended and Restated Credit Agreement) allowing for the use of up to $100 million unrestricted cash and cash equivalents as a reduction to consolidated funded indebtedness (as defined in the Fourth Amended and Restated Credit Agreement).
Current wording
On November 5, 2025, we entered into an amendment (the “First Amendment”) to the Fourth Amended and Restated Credit Agreement. The First Amendment increases the maximum consolidated leverage ratio permitted thereunder to 3.75:1.00, with a step-up to 4.25:1.00 following a designated acquisition and revised our consolidated leverage ratio definition (as defined in the Fourth Amended and Restated Credit Agreement) allowing for the use of up to $100 million unrestricted cash and cash equivalents as a reduction to consolidated funded indebtedness (as defined in the Fourth Amended and Restated Credit Agreement).
Previous wording
As of April 3, 2026, we had $71.4 (€61.9) million outstanding under the Euro Term Loans and $75.0 million outstanding under the U.S. Term Loans. As of April 3, 2026, we had no outstanding revolver borrowings under our Senior Credit Facilities. Borrowings under the Credit Agreement bear interest at the Base Rate (as defined in the Credit Agreement) plus a margin ranging between zero and 0.75% per annum, determined by reference to the consolidated leverage ratio, or SOFR, SONIA or EURIBOR, as applicable, plus a margin ranging between 1.00% and 1.75% per annum, determined by reference to our consolidated leverage ratio. In addition, we are obligated to pay a commitment fee on the unused portion of the Revolving Facility. As of April 3, 2026, we had outstanding borrowings under the Credit Agreement denominated in Euro and U.S. dollars of $71.4 million and $75.0 million, respectively.
Current wording
As of July 3, 2026, we had $69.4 (€60.8) million outstanding under the Euro Term Loans and $75.0 million outstanding under the U.S. Term Loans. As of July 3, 2026, we had no outstanding revolver borrowings under our Senior Credit Facilities. Borrowings under the Credit Agreement bear interest at the Base Rate (as defined in the Credit Agreement) plus a margin ranging between zero and 0.75% per annum, determined by reference to the consolidated leverage ratio, or SOFR, SONIA or EURIBOR, as applicable, plus a margin ranging between 1.00% and 1.75% per annum, determined by reference to our consolidated leverage ratio. In addition, we are obligated to pay a commitment fee on the unused portion of the Revolving Facility. As of July 3, 2026, we had outstanding borrowings under the Credit Agreement denominated in Euro and U.S. dollars of $69.4 million and $75.0 million, respectively.
Previous wording
(1) Maximum consolidated leverage ratio shall be increased to 4.25 for four consecutive quarters following a designated acquisition, as defined in the Fourth Amended and Restated Credit Agreement.
Current wording
(1) Maximum consolidated leverage ratio shall be increased to 4.50 for four consecutive quarters following a designated acquisition, as defined in the Fourth Amended and Restated Credit Agreement.
Previous wording
On November 12, 2025, we issued 12,650,000 of our 6.50% tangible equity units (“Units”) at a public offering price of $50.00 per Unit for an aggregate offering of $632.5 million (the “Units Offering”). We received proceeds of $613.0 million after the deduction of the underwriters’ fees and other issuance costs. Each Unit is comprised of a prepaid stock purchase contract and a senior amortizing note. Each purchase contract will automatically settle on November 1, 2028, and we will deliver at least 0.3729, but no more than 0.4662 of our common shares per purchase contract, subject to adjustment based upon the applicable market value of our common shares. Each amortizing note has a principal amount of $8.74 and bears interest at a rate of 6.30% per annum, with a final installment date of November 1, 2028 (“Amortizing Note”).
Current wording
On November 12, 2025, we issued 12,650,000 of our 6.50% tangible equity units (“Units”) at a public offering price of $50.00 per Unit for an aggregate offering of $632.5 million (the “Units Offering”). We received proceeds of $613.0 million after the deduction of the underwriters’ fees and other issuance costs. Each Unit is comprised of a prepaid stock purchase contract and a senior amortizing note. Each purchase contract will automatically settle on November 1, 2028, and we will deliver at least 0.3729, but no more than 0.4662 of our common shares per purchase contract, subject to adjustment based upon the applicable market value of our common shares. Each amortizing note has a principal amount of $8.74 and bears interest at a rate of 6.30% per annum, with a final installment date of November 1, 2028 (“Amortizing Note”). As of July 3, 2026, we had $94.4 million outstanding under the Amortizing Notes.
Previous wording
In February 2020, our Board of Directors approved a share repurchase plan (the “2020 Repurchase Plan”) authorizing the repurchase of $50.0 million worth of common shares. Share repurchases have been made under the 2020 Repurchase Plan pursuant to Rule 10b-18 under the Securities Exchange Act of 1934. We repurchased 88 thousand shares under the 2020 Repurchase Plan for an aggregate purchase price of $10.2 million and an average price of $116.13 per share during the three months ended April 3, 2026. As of April 3, 2026, we had completed the 2020 Repurchase Plan.
Current wording
In February 2020, our Board of Directors approved a share repurchase plan (the “2020 Repurchase Plan”) authorizing the repurchase of $50.0 million worth of common shares. Share repurchases have been made under the 2020 Repurchase Plan pursuant to Rule 10b-18 under the Securities Exchange Act of 1934. We repurchased 88 thousand shares under the 2020 Repurchase Plan for an aggregate purchase price of $10.2 million and an average price of $116.13 per share during the six months ended July 3, 2026. We completed the 2020 Repurchase Plan in the first quarter of 2026.
Previous wording
In September 2025, our Board of Directors approved a new share repurchase plan (the “2025 Repurchase Plan”) authorizing the repurchase of an additional $200.0 million worth of common shares. The 2025 Repurchase Plan does not obligate the Company to acquire any particular amount of common shares. No time limit was set for the completion of the 2025 Repurchase Plan, and the plan may be suspended or discontinued at any time. We repurchased 71 thousand shares under the 2025 Repurchase Plan for an aggregate purchase price of $8.4 million and an average price of $118.08 per share during the three months ended April 3, 2026. As of April 3, 2026, we had $191.6 million available for future share repurchases under the 2025 Repurchase Plan.
Current wording
In September 2025, our Board of Directors approved a new share repurchase plan (the “2025 Repurchase Plan”) authorizing the repurchase of an additional $200.0 million worth of common shares. The 2025 Repurchase Plan does not obligate us to acquire any particular amount of common shares. No time limit was set for the completion of the 2025 Repurchase Plan, and the plan may be suspended or discontinued at any time. We repurchased 71 thousand shares under the 2025 Repurchase Plan for an aggregate purchase price of $8.4 million and an average price of $118.08 per share during the six months ended July 3, 2026. As of July 3, 2026, we had $191.6 million available for future share repurchases under the 2025 Repurchase Plan.
Previous wording
Cash Flows for the Three Months Ended April 3, 2026 and March 28, 2025
Current wording
Cash Flows for the Six Months Ended July 3, 2026 and June 27, 2025
Previous wording
Cash provided by operating activities was $51.6 million for the three months ended April 3, 2026, versus $31.7 million for the prior year period. Cash provided by operating activities for the three months ended April 3, 2026 increased from the prior year period primarily as a result of improved net working capital and the reduction of bonus payouts in 2026 following the conversion of 2025 annual bonuses to equity.
Current wording
Cash provided by operating activities was $116.5 million for the six months ended July 3, 2026, versus $46.8 million for the prior year period. Cash provided by operating activities for the six months ended July 3, 2026 increased from the prior year period primarily as a result of improved net working capital, advanced payments received from a customer related to a supply agreement, and the reduction of bonus payouts in 2026 following the conversion of 2025 annual bonuses to equity.
Previous wording
Cash used in investing activities was $3.8 million for the three months ended April 3, 2026, primarily driven by $4.1 million for capital expenditures.
Current wording
Cash used in investing activities was $11.3 million for the six months ended July 3, 2026, primarily driven by $11.6 million paid for capital expenditures.
Previous wording
Cash provided by investing activities was $1.3 million for the three months ended March 28, 2025, primarily driven by $5.5 million of cash received from the sale of properties. We also paid $4.3 million for capital expenditures.
Current wording
Cash used in investing activities was $65.3 million for the six months ended June 27, 2025, primarily driven by $63.2 million of cash considerations (net of cash acquired) paid for our 2025 acquisition and $7.7 million for capital expenditures, partially offset by $5.5 million of cash received from the sale of properties.
Previous wording
Cash used in financing activities was $40.1 million for the three months ended April 3, 2026, primarily driven by $18.6 million related to the repurchase of common shares, $8.8 million of debt repayments, $7.0 million of payroll tax payments upon vesting of share-based compensation awards, and $4.4 million of contingent consideration payments related to the 2025 acquisition.
Current wording
Cash provided by financing activities was $230.5 million for the six months ended July 3, 2026, primarily driven by $288.5 million of proceeds from the issuance of common shares in a private placement, net of issuance costs, partially offset by $18.8 million of debt repayments, $18.6 million related to the repurchase of common shares, $12.4 million of payroll tax payments upon vesting of share-based compensation awards, and $4.4 million of contingent consideration payments related to the 2025 acquisition.
Previous wording
Cash used in financing activities was $42.7 million for the three months ended March 28, 2025, primarily driven by $29.7 million of term loan and revolving credit facility repayments, $6.7 million of payroll tax payments upon vesting of share-based compensation awards and $6.2 million related to the repurchase of common shares.
Current wording
Cash provided by financing activities was $12.1 million for the six months ended June 27, 2025, primarily driven by $72.8 million of borrowings under our revolving credit facility to fund our 2025 acquisition, partially offset by $41.0 million of term loan and revolving credit facility repayments, $7.2 million of payroll tax payments upon vesting of share-based compensation awards and $6.2 million related to the repurchase of common shares.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Basic earnings per common share (“Basic EPS”) of $0.83 for the six months ended July 3, 2026 increased $0.12 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $0.82 for the six months ended July 3, 2026 increased $0.11 from the prior year period. The increases were primarily due to an increase in net income, partially offset by the increase in the weighted average common shares outstanding as a result of the private placement and the prior year tangible equity unit offering.
Current report — wording carried from elsewhere
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $12.2 million, or 2.3% of revenue, during the six months ended July 3, 2026, versus $12.4 million, or 2.6% of revenue, during the prior year period.
Current report — wording carried from elsewhere
Net interest expense was $2.9 million for the six months ended July 3, 2026, versus $11.5 million for the prior year period. The decrease in net interest expense was primarily due to higher interest income and lower interest expense as a result of reduced average debt levels. For the six months ended July 3, 2026, the weighted average interest rate on our senior credit facilities was 5.83%, versus 5.50% in the prior year period.
Current report — wording carried from elsewhere
Our effective tax rate for the three months ended June 27, 2025 of 22.3% differs from the Canadian federal and provincial combined statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated U.S. tax benefits for Foreign Derived Intangible Income (“FDII”) and R&D tax credits, and U.K. patent box deductions; partially offset by various non-deductible transaction-related, compensation expenses and uncertain tax position accruals.
Current report — wording carried from elsewhere
Our effective tax rate for the six months ended June 27, 2025 of 20.2% differs from the Canadian federal and provincial combined statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated U.S. tax benefits for Foreign Derived Intangible Income (“FDII”) and R&D tax credits, and U.K. patent box deductions; partially offset by various non-deductible transaction-related and compensation expenses and uncertain tax position accruals.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Foreign exchange transaction gains (losses) were nominal for the three months ended April 3, 2026 and the three months ended March 28, 2025.
Previous report — wording carried elsewhere
As of April 3, 2026, we had $103.1 million outstanding under the Amortizing Notes.