Novanta Raises Outlook as Humanoid Servo Orders Move Past Prototyping and Riverpoint Deal Closes
Q2 2026 earnings call, August 6, 2026
Novanta delivered what management called an outstanding second quarter, with 9% organic sales growth, 16% adjusted EBITDA growth and adjusted EPS up 17%, prompting the company to raise its full-year 2026 guidance to reflect both stronger core demand and the newly closed Riverpoint Medical acquisition. Chair and CEO Matthijs Glastra told investors the results give Novanta "a terrific foundation to close our largest acquisition in history," with reported revenue growth for the year now expected to exceed 15%.
Humanoid Robotics Orders Move Into Training Phase
The most notable disclosure of the quarter came from the Automation Enabling Technologies segment, where Novanta said it received its first significant orders for servo drives supporting deployment of hundreds of humanoids in customer testing and learning facilities. Co-Chief Operating Officer Chuck Ravetto described this as a shift beyond prototyping: "What we saw here in the last quarter is the first move maybe beyond prototyping into training centers or development centers, is really the next phase of this." Glastra added that bookings in this category are "rapidly improving, but from a small base," and that the timeline to commercial deployment remains uncertain. The company is working with OEM customers and partners including NVIDIA to ensure safe, energy-efficient operation of these systems. While Ravetto was careful to note this did not materially affect segment margins this quarter, the shift from prototype to training-scale orders is a meaningful signal for a business Novanta has flagged as a long-duration growth vector. Generative AI-linked infrastructure and robotics applications, which include front-end semiconductor equipment, advanced packaging, and air-bearing spindles used in GPU chip drilling, now represent approximately 17% of total company revenue and grew roughly 25% year-over-year, a pace management expects to continue into the second half.
Riverpoint Medical Closes, Reshapes Medical Mix
Novanta closed its acquisition of Riverpoint Medical at the end of July, calling it a "milestone transformative acquisition" and the largest in company history. The deal roughly doubles Novanta's recurring medical consumables business to approximately $300 million, lifting that mix from about 15% to roughly 25% of annualized revenue, and pushes total medical end-market exposure to 60% of company revenue. Management said the transaction is expected to be immediately accretive to revenue growth, gross margin, EBITDA margin and earnings per share, as well as to long-term organic growth. CFO Robert Buckley detailed the near-term financial contribution: Riverpoint is expected to generate roughly $60 million to $65 million of revenue and about $25 million of EBITDA in the back half of 2026, adding approximately $0.06 to adjusted EPS after accounting for roughly $20 million of interest expense and additional stock compensation tied to employee retention grants. Buckley cautioned that guidance embeds some conservatism given Riverpoint's inexperience operating as part of a public company: "They've never closed a quarter in their life, and they've never been part of a public company." The deal was funded in part by a $300 million equity raise completed June 29, pushing pro forma gross leverage to approximately 2.7 times trailing EBITDA, though net leverage remains low given Novanta's $719 million cash balance.
Manufacturing Restructuring Accelerates
Building on momentum from closing two factories in the second quarter, Novanta is accelerating its footprint consolidation by announcing two additional factory closures, targeted for completion by the end of the first quarter of 2027, as part of its existing restructuring program. Glastra framed this as a mechanism to reduce trade-related risk and structurally improve margins: the moves are intended to "dramatically reduce or eliminate our sensitivity to trade disruptions while sustainably expanding gross margin, profit margins, and cash flows." Buckley was candid about ongoing tariff drag, noting the company remains in "a net negative position" on tariffs and that surcharging will not fully offset new increases, particularly since customers bear the brunt of IEEPA-related tariffs while Novanta absorbs more of the Section 232 and 301 impact. Even so, Buckley guided to a 48% adjusted gross margin in the second half of 2026, sustaining into 2027 for another 100 basis points of improvement, calling that outlook conservative given two site closures are already complete and two more are underway.
Segment Performance and Near-Term Guidance
Automation Enabling Technologies segment revenue grew 12% year-over-year with an 18% increase in bookings and a book-to-bill of 1.1, and management now expects 12% to 14% growth in the third quarter, an improvement versus the first half. Medical Solutions grew 8.6%, aided by strength in advanced surgery, though the segment posted a soft 0.79 book-to-bill that John Lesica attributed to lumpy annual purchase order timing rather than demand weakness, pointing instead to a four-quarter rolling average above 1.0. Precision medicine, exposed to a still-struggling life sciences market representing under 10% of total revenue, is expected to decline in the third quarter, with management not expecting a return to sustained growth until late 2027. For the full year, Novanta guided to GAAP revenue of $1.130 billion to $1.140 billion, adjusted EBITDA of $273 million to $278 million, and adjusted diluted EPS of $3.68 to $3.74. Third-quarter revenue is guided to $300 million to $304 million, implying 7% to 9% organic growth and 21% to 23% reported growth once Riverpoint is included.