NOVANTA INC
For the period ended Oct 2, 2026. Filed Nov 9, 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.
Oct 2, 2026 · Filed Nov 9, 2026
NOVT$145.98+8.0%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious 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 OPERATIONSCurrent report: 10-Q
Period ended 2026-10-02; filed 2026-11-09.
0001193125-26-453802
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 140 previous paragraphs and 143 current paragraphs.
74 unchanged; 54 reworded; 14 added; 11 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 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 (14)
Current report
We continue to be affected by volatility and uncertainties in the macroeconomic and geopolitical environment as well as market-driven factors that have impacted the availability, cost, and timely delivery of materials and components. This volatility and uncertainty have been primarily driven by shortages of certain components and materials resulting from increased global demand related to artificial intelligence; export license requirements imposed by the Chinese government on certain rare-earth materials and magnets; inflationary pressures on materials, components, and freight; changes in trade policy, including tariffs; and logistics disruptions resulting from geopolitical conflicts. We continue to work with our suppliers and customers and to pursue sourcing, pricing, and operational actions to mitigate these effects; however, we may not be able to fully offset them.
Current report
Operating income of $59.5 million for the nine months ended October 2, 2026 decreased $9.7 million, or 14.0%, from the prior year period. This decrease was primarily attributable to an increase in selling, general and administrative expenses of $27.9 million, an increase in restructuring, acquisition, and related costs of $21.4 million, and an increase in amortization expense of $7.5 million, partially offset by an increase in gross profit of $48.1 million.
Current report
Medical Solutions segment revenue for the three months ended October 2, 2026 increased $37.1 million, or 30.3%, versus the prior year period, primarily due to the impact of $32.9 million of revenue contributions from the 2026 acquisition.
Current report
R&D expenses were $73.6 million, or 8.9% of revenue, during the nine months ended October 2, 2026, versus $72.6 million, or 10.1% of revenue, during the prior year period. The increase in R&D expenses was primarily driven by the inclusion of costs from the 2026 acquisition. As a percentage of revenue, R&D expenses decreased 1.2 percentage points, reflecting improved leverage on our R&D costs as revenue growth outpaced growth in spend.
Current report
We recorded restructuring, acquisition, and related costs of $23.1 million during the three months ended October 2, 2026, versus $6.7 million during the prior year period. The increase of $16.4 million was primarily due to higher acquisition and related costs, which were $19.2 million compared to $1.5 million in the prior year period. This increase was partially offset by lower restructuring costs, which were $3.9 million compared to $5.2 million in the prior year period.
Current report
Automation Enabling Technologies segment operating income was $40.8 million, or 28.1% of revenue, during the three months ended October 2, 2026, versus $27.4 million, or 21.8% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $13.7 million and a decrease in R&D expenses of $0.7 million, partially offset by an increase in restructuring, acquisition and related costs of $0.9 million.
Current report
Automation Enabling Technologies segment operating income was $108.6 million, or 26.3% of revenue, during the nine months ended October 2, 2026, versus $85.7 million, or 23.2% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $30.5 million and a decrease in R&D expenses of $0.9 million, partially offset by an increase in restructuring, acquisition and related costs of $5.2 million, and an increase in SG&A expenses of $3.1 million.
Current report
Medical Solutions segment operating income was $9.5 million, or 6.0% of revenue, during the three months ended October 2, 2026, versus $15.9 million, or 13.0% of revenue, during the prior year period. The decrease in operating income was primarily due to an increase in amortization expense due to the 2026 acquisition of $7.7 million, an increase in SG&A expenses of $5.1 million, an increase in R&D expenses of $2.5 million, and an increase in restructuring, acquisition and related costs of $2.0 million, partially offset by an increase in gross profit of $10.9 million.
Current report
Medical Solutions segment operating income was $39.9 million, or 9.6% of revenue, during the nine months ended October 2, 2026, versus $36.6 million, or 10.4% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $18.0 million, and a decrease in restructuring, acquisition and related costs of $2.3 million, partially offset by an increase in SG&A expenses of $8.2 million, an increase in amortization expense as a result of the 2026 acquisition of $7.4 million, and an increase in R&D expenses of $1.3 million.
Current report
Foreign exchange transaction gains (losses) were $0.7 million for the three months ended October 2, 2026 versus less than $0.1 million for the prior year period.
Current report
Our effective tax rate for the three months ended October 2, 2026 was 68.2%, versus 32.4% for the same period in the prior year. Our effective tax rate of 68.2% for the three months ended October 2, 2026 differs from the Canadian federal and provincial combined statutory tax rate of 29.0% primarily due to significant acquisition-related transaction costs that were not deductible for income tax purposes and a change in the mix of income, most notably in the U.S., resulting from the Riverpoint acquisition. The non-deductible costs reduced pre-tax income for the quarter without a corresponding tax benefit. In addition, because the interim tax provision is determined on a year-to-date basis, the effect of these items on the estimated annual effective tax rate was recognized in the current quarter, resulting in an elevated quarterly effective tax rate.
Current report
On July 22, 2026, we drew $200.0 million under the 2026 Delayed Draw Term Loan Commitments. In connection with the drawdown, we incurred an additional $0.2 million of deferred financing costs.
Current report
Riverpoint Medical Milestone Payment
Current report
In connection with the acquisition of Riverpoint Medical, the agreement provides for a milestone payment of $250.0 million on or before January 8, 2027. The milestone liability is recorded at its present value within accrued expenses and other current liabilities, which was $246.5 million as of October 2, 2026, and the remaining discount is being accreted to acquisition and related costs through the payment date.
Removed paragraphs (11)
Previous report
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 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
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 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.
Reworded paragraphs (54)
Previous wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Consolidated Financial Statements and Notes included in Item 1 of this Quarterly Report on Form 10-Q. The MD&A contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. These forward-looking statements include, but are not limited to, our future financial results and financial condition; our belief that the Purchasing Managers Index (“PMI”) may provide an indication of the impact of general economic conditions on our sales into the advanced industrial end market; our strategy; drivers of revenue growth and our growth expectations in various markets; management’s plans and objectives for future operations, expenditures and product development, and investments in research and development; business prospects; potential of future product releases and expansion of our product and service offerings; industry trends; market conditions; our competitive positions; changes in economic and political conditions, including impacts from tariffs, supply chain disruptions and constraints and inflationary pressures; changes in accounting principles; changes in actual or assumed tax liabilities and tax law; expectations regarding tax exposures; anticipated reinvestment of future earnings, share repurchases and dividend policy; anticipated expenditures in regard to our benefit plans; future acquisitions and integration and anticipated benefits from acquisitions and dispositions; anticipated economic benefits and expected costs of restructuring programs; our ability to repay our indebtedness; our intentions regarding the use of cash; expectations regarding legal and regulatory requirements, including environmental requirements, and our compliance thereto; and other statements that are not historical facts.
Current wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Consolidated Financial Statements and Notes included in Item 1 of this Quarterly Report on Form 10-Q. The MD&A contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. These forward-looking statements include, but are not limited to, our future financial results and financial condition; our belief that the Purchasing Managers Index (“PMI”) may provide an indication of the impact of general economic conditions on our sales into the advanced industrial end market; our strategy; drivers of revenue growth and our growth expectations in various markets; management’s plans and objectives for future operations, expenditures and product development, and investments in research and development; business prospects; potential of future product releases and expansion of our product and service offerings; industry trends; market conditions; our competitive positions; changes in economic and political conditions, including impacts from tariffs, supply chain disruptions and constraints and inflationary pressures; changes in accounting principles; changes in actual or assumed tax liabilities and tax law; expectations regarding tax exposures; anticipated reinvestment of future earnings, share repurchases and dividend policy; anticipated expenditures in regard to our benefit plans; future acquisitions and integration and anticipated benefits from acquisitions and dispositions; anticipated economic benefits and expected costs of restructuring programs; our ability to repay our indebtedness; our ability to fund the milestone payment related to the Riverpoint Medical acquisition; our intentions regarding the use of cash; expectations regarding legal and regulatory requirements, including environmental requirements, and our compliance thereto; and other statements that are not historical facts.
Previous 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.
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 the effect of order delays, cancellations or changes in customer demand, 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 fund the milestone payment related to the Riverpoint Medical acquisition when due; 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, including shortages and export restrictions; 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…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
We are a leading global supplier of core technology solutions that give medical, life science, and advanced industrial original equipment manufacturers (“OEMs”) a competitive advantage. We combine deep proprietary technology expertise and competencies in precision medicine, precision manufacturing, robotics and automation, and advanced surgery with a proven ability to solve complex technical challenges. This enables us to engineer proprietary technology solutions that deliver extreme precision and performance, tailored to our customers' demanding applications.
Current wording
We are a leading global supplier of core technology solutions that give medical, life science, and advanced industrial original equipment manufacturers (“OEMs”) a competitive advantage. We combine deep proprietary technology expertise and competencies in precision medicine, precision manufacturing, robotics and automation, and advanced surgical technologies with a proven ability to solve complex technical challenges. This enables us to engineer proprietary technology solutions that deliver extreme precision and performance, tailored to our customers' demanding applications.
Previous wording
The Medical Solutions segment designs, manufactures and markets a range of medical grade technologies, including medical insufflators and endoscopic pumps and related disposables, imaging, identification and RFID solutions, advanced motion control solutions, light engines, and integrated operating room technologies. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells the majority of these products directly, utilizing a highly technical sales force, and also sells some indirectly, through resellers and distributors.
Current wording
The Medical Solutions segment designs, manufactures and markets a range of medical grade technologies, including medical insufflators and endoscopic pumps and related disposables, minimally invasive surgical consumables, imaging, identification and RFID solutions, advanced motion control solutions, light engines, and integrated operating room technologies. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells the majority of these products directly, utilizing a highly technical sales force, and also sells some indirectly, through resellers and distributors.
Previous 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.
Current wording
For the nine months ended October 2, 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 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.
Current wording
For the nine months ended October 2, 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
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 wording
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 was available for borrowing at our option for up to six months after the Second Amendment Effective Date and was drawn upon on July 22, 2026. 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.
Previous wording
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 wording
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 $12.0 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 $288.0 million as an increase to additional paid-in capital.
Previous wording
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 wording
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 $1,200.6 million, net of cash acquired, 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.
Previous wording
In addition, the conflict arising from coordinated US and Israeli military strikes on Iran beginning in February 2026, and Iran's subsequent retaliatory actions, including the temporary closure of the Strait of Hormuz, has contributed to increased global energy prices, heightened supply chain uncertainty, and rising freight and commodity costs. Although the Company does not have material operations in the Middle East, further escalation or a resumption of hostilities could disrupt global supply chains and energy markets, increase component and raw material costs, exacerbate inflationary pressures on our manufacturing operations, and adversely affect overall macroeconomic conditions in the markets in which we operate.
Current wording
In addition, the conflict arising from coordinated U.S. and Israeli military strikes on Iran beginning in February 2026, and Iran’s subsequent retaliatory actions, including temporary closure of the Strait of Hormuz, has contributed to increased global energy prices, heightened supply chain uncertainty, and rising freight and commodity costs. Although we do not have material operations in the Middle East, escalation or a resumption of hostilities could further disrupt global supply chains and energy markets, increase component and raw material costs, exacerbate inflationary pressures on our manufacturing operations, and adversely affect overall macroeconomic conditions in the markets in which we operate.
Previous wording
These conditions have impacted, and may continue to impact in the future, the Company’s business, financial condition and results of operations. We address macroeconomic challenges by continuing to execute our strategy.
Current wording
These conditions have impacted, and may continue to impact in the future, our business, financial condition and results of operations. We address macroeconomic volatility and uncertainty by continuing to execute our strategy.
Previous 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
Current wording
Results of Operations for the Three and Nine Months Ended October 2, 2026 Compared with the Three and Nine Months Ended September 26, 2025
Previous 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.
Current wording
Total revenue of $305.0 million for the three months ended October 2, 2026 increased $57.2 million, or 23.1%, from the prior year period primarily due to revenue from the 2026 acquisition and a 16.0% increase in revenue in the Automation Enabling Technologies segment and 3.5% increase in the Medical Solutions segment excluding the impact of our 2026 acquisition. The effect of our 2026 acquisition resulted in an increase in revenue of $32.9 million or 13.3%. In addition, foreign currency exchange rates unfavorably impacted our revenue by $0.3 million, or 0.1%, for the three months ended October 2, 2026.
Previous wording
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 wording
Total revenue of $828.5 million for the nine months ended October 2, 2026 increased $106.3 million, or 14.7%, from the prior year period primarily due to revenue from the 2026 and 2025 acquisitions, and a 11.5% increase in revenue in the Automation Enabling Technologies segment and a 6.2% increase in the Medical Solutions segment excluding the impact of the 2026 and 2025 acquisitions. The net effect of our 2026 and 2025 acquisitions resulted in an increase in revenue of $41.9 million, or 5.8%. In addition, foreign currency exchange rates favorably impacted our revenue by $10.3 million, or 1.4%, for the nine months ended October 2, 2026.
Previous 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.
Current wording
Operating income of $13.9 million for the three months ended October 2, 2026 decreased $7.9 million, or 36.3%, from the prior year period. This decrease was attributable to an increase in restructuring, acquisition, and related costs of $16.4 million, an increase in amortization expense of $7.8 million, an increase in selling, general, and administrative expenses of $6.2 million, and an increase in research and development, and engineering expenses of $2.3 million, partially offset by an increase in gross profit of $24.7 million.
Previous 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.
Current wording
Basic earnings per common share (“Basic EPS”) of $0.05 for the three months ended October 2, 2026 decreased $0.25 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $0.05 for the three months ended October 2, 2026 decreased $0.25 from the prior year period. The decreases were primarily due to a decrease in net income and the increase in the weighted average common shares outstanding as a result of the private placement.
Previous wording
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 wording
Basic earnings per common share (“Basic EPS”) of $0.86 for the nine months ended October 2, 2026 decreased $0.15 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $0.86 for the nine months ended October 2, 2026 decreased $0.15 from the prior year period. The decreases were primarily due to the increase in the weighted average common shares outstanding as a result of the private placement.
Previous wording
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 wording
Automation Enabling Technologies segment revenue for the three months ended October 2, 2026 increased $20.0 million, or 16.0%, versus the prior year period, primarily due to a 17.3% increase in sales of robotics and automation products and 13.7% increase in precision manufacturing products, associated with end market demand and new product introductions.
Previous wording
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 wording
Automation Enabling Technologies segment revenue for the nine months ended October 2, 2026 increased $42.7 million, or 11.5%, versus the prior year period, due to an increase of 12.7% in sales of robotics and automation products and 9.5% increase in precision manufacturing products, associated with end market demand and new product introductions.
Previous 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.
Current wording
Medical Solutions segment revenue for the nine months ended October 2, 2026 increased $63.6 million, or 18.1%, versus the prior year period, primarily due to the net impact of $41.9 million in revenue contributions from the 2026 and 2025 acquisitions, and an increase in sales of advanced surgical technology products excluding the 2026 acquisition.
Previous wording
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 wording
Automation Enabling Technologies segment gross profit for the three months ended October 2, 2026 increased $13.7 million, or 23.1%, 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 three months ended October 2, 2026, versus a gross profit margin of 47.3% for the prior year period. The increase in gross profit margin was primarily due to higher volumes, pricing, and lower net tariff expense, partially offset by material inflationary costs and factory redundancy costs associated with our regional manufacturing initiative.
Previous wording
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 wording
Automation Enabling Technologies segment gross profit for the nine months ended October 2, 2026 increased $30.5 million, or 17.2%, 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 nine months ended October 2, 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, and factory redundancy costs associated with our regional manufacturing initiative.
Previous 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.
Current wording
Medical Solutions segment gross profit for the three months ended October 2, 2026 increased $10.9 million, or 20.8%, versus the prior year period, primarily due to an increase in revenue. Medical Solutions segment gross profit margin was 39.9% for the three months ended October 2, 2026, versus a gross profit margin of 43.0% for the prior year period. The decrease in gross profit margin was primarily due to an increase in amortization of intangible assets as a result of the 2026 acquisition and temporary cost increases incurred as part of our operational transformation associated with manufacturing site closures and factory redundancy costs associated with our regional manufacturing initiative.
Previous 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.
Current wording
Medical Solutions segment gross profit for the nine months ended October 2, 2026 increased $18.0 million, or 12.1%, versus the prior year period, primarily due to an increase in revenue. Medical Solutions segment gross profit margin was 40.0% for the nine months ended October 2, 2026, versus a gross profit margin of 42.1% for the prior year period. The decrease in gross profit margin was primarily due to an increase in amortization of intangible assets as a result of the 2026 acquisition and temporary cost increases incurred as part of our operational transformation associated with manufacturing site closures and factory redundancy costs associated with our regional manufacturing initiative.
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 $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.
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 $26.3 million, or 8.6% of revenue, during the three months ended October 2, 2026, versus $24.1 million, or 9.7% of revenue, during the prior year period. The increase in R&D expenses was primarily driven by the inclusion of costs from the 2026 acquisition.
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 $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.
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 $57.6 million, or 18.9% of revenue, during the three months ended October 2, 2026, versus $51.4 million, or 20.7% of revenue, during the prior year period. The increase in SG&A expenses, was primarily driven by higher employee compensation and the inclusion of costs from the 2026 acquisition, partially offset by a decrease in costs incurred related to a prior year insurance recovery claim that did not recur in the current period.
Previous wording
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 wording
SG&A expenses were $172.0 million, or 20.8% of revenue, during the nine months ended October 2, 2026, versus $144.1 million, or 19.9% of revenue, during the prior year period. The increase in SG&A expenses, both in terms of total dollars and as a percentage of revenue, was primarily driven by higher variable employee compensation, costs associated with the planning and design phase of our financial and operation system implementation, as well as the inclusion of costs from the 2026 acquisition.
Previous 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.
Current wording
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $14.7 million, or 4.8% of revenue, during the three months ended October 2, 2026, versus $6.9 million, or 2.8% of revenue, during the prior year period. The increase in amortization expense in terms of total dollars and as a percentage of revenue is primarily due to more acquired intangible assets from the 2026 acquisition.
Previous wording
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 wording
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $26.9 million, or 3.2% of revenue, during the nine months ended October 2, 2026, versus $19.4 million, or 2.7% of revenue, during the prior year period. The increase in amortization expense in terms of total dollars and as a percentage of revenue is primarily due to more acquired intangible assets from the 2026 acquisition.
Previous 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.
Current wording
We recorded restructuring, acquisition, and related costs of $38.2 million during the nine months ended October 2, 2026, versus $16.8 million during the prior year period. The increase of $21.4 million was primarily due to higher acquisition and related costs, which were $28.1 million compared to $4.4 million in the prior year period. This increase was partially offset by lower restructuring costs, which were $10.1 million compared to $12.4 million in the prior year period.
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 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.
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 October 2, 2026 increased $15.0 million versus the prior year period. The increase in operating loss was primarily driven by higher acquisition and related costs.
Previous wording
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 wording
Unallocated costs for the nine months ended October 2, 2026 increased $35.8 million versus the prior year period. The increase in operating loss was primarily driven by higher acquisition and related costs and higher variable compensation costs.
Previous 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.
Current wording
Net interest expense was $8.3 million for the three months ended October 2, 2026, versus $6.0 million for the prior year period. The increase in net interest expense was primarily due to higher interest expense as a result of increased average debt levels as a result of borrowings to fund the 2026 acquisition. For the three months ended October 2, 2026, the weighted average interest rate on our senior credit facilities was 5.34%, versus 5.32% in the prior year period.
Previous wording
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 wording
Net interest expense was $11.2 million for the nine months ended October 2, 2026, versus $17.5 million for the prior year period. The decrease in net interest expense was primarily due to higher interest income. For the nine months ended October 2, 2026, the weighted average interest rate on our senior credit facilities was 5.58%, versus 5.48% in the prior year period.
Previous wording
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 wording
Foreign exchange transaction gains (losses) were $0.6 million for the nine months ended October 2, 2026 versus $(3.1) million for the prior year period. The increase in net foreign exchange transaction gains 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.
Previous 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.
Current wording
Net other expense was nominal for the three and nine months ended October 2, 2026 and the three and nine months ended September 26, 2025.
Previous wording
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 wording
Our effective tax rate for the three months ended September 26, 2025 was 32.4%. Our effective tax rate of 32.4% for the three months ended September 26, 2025 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”) (currently referred to as FDDEI) and R&D tax credits, and U.K. Patent Box deductions; partially offset by various non-deductible transaction-related expenses, non-deductible compensation expenses, and uncertain tax position accruals.
Previous wording
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 wording
Our effective tax rate for the nine months ended October 2, 2026 was 26.6%, versus 24.2% for the same period in the prior year. Our effective tax rate of 26.6% for the nine months ended October 2, 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, U.K. Patent Box deductions, research and development tax credits, estimated U.S. tax benefits for FDDEI, and windfall tax benefits from the vesting of restricted stock units; partially offset by non-deductible compensation, non-deductible transaction-related expenses, and the U.S. BEAT.
Previous wording
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.
Current wording
Our effective tax rate for the nine months ended September 26, 2025 was 24.2%. Our effective tax rate of 24.2% for the nine months ended September 26, 2025 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 FDII and R&D tax credits, and U.K. Patent Box deductions; partially offset by various non-deductible transaction-related expenses, non-deductible compensation expenses, and uncertain tax position accruals.
Previous wording
Our cash requirements primarily consist of principal and interest payments associated with our Senior Credit Facilities (as defined below), principal and interest payments associated with the tangible equity unit Amortizing Notes, operating and finance leases, purchase commitments, and pension obligations. Such contractual obligations are described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to Consolidated Financial Statements, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Current wording
Our cash requirements primarily consist of principal and interest payments associated with our Senior Credit Facilities (as defined below), principal and interest payments associated with the tangible equity unit Amortizing Notes, the milestone payment related to the acquisition of Riverpoint Medical, operating and finance leases, and purchase commitments. Such contractual obligations are described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to Consolidated Financial Statements, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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Current report — wording carried from elsewhere
10-K for the fiscal year ended December 31, 2025 under the heading “Risk Factors”, as updated by Part II, Item 1A of this Quarterly Report and in our other filings with the Securities and Exchange Commission.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.