Novanta bets big on medical consumables with $1.45B deal
The precision-motion specialist expects the Riverpoint Medical acquisition to double its recurring medical consumables revenue to $300 million.
The precision-motion and photonics supplier Novanta (NOVT) announced its largest acquisition to date, agreeing to buy Riverpoint Medical for $1.2 billion in cash plus a $250 million milestone payment in 2027. The deal, disclosed alongside first-quarter results, marks a strategic pivot toward higher-margin medical consumables and accelerates Novanta’s revenue growth profile.
The acquisition is projected to reshape Novanta’s end-market mix, lifting medical revenue to 60% of total sales from 53% in 2025. Riverpoint’s organic revenue growth outlook of 12% to 15% CAGR outpaces Novanta’s standalone mid-single-digit growth, and the company expects the deal to be immediately accretive to adjusted gross margin (47% pro forma vs. 46% standalone) and adjusted EBITDA margin (24% pro forma vs. 23% standalone). Novanta also identified over $80 million in cumulative profit and cash flow synergies over five years.
First-quarter results underscored improving momentum. Revenue rose 10.4% year-over-year to $257.7 million, accelerating from 8.5% growth in the prior quarter. Organic revenue growth turned positive at 3.1%, a sharp rebound from a 0.5% decline in full-year 2025. Adjusted diluted earnings increased 9.5% to $0.81 a share, while adjusted EBITDA climbed 14.2% to $57.1 million. Operating cash flow surged 63% to $51.6 million, recovering from an 86% decline in the prior quarter.
The Medical Solutions segment led growth, with revenue up 14.8% to $126.5 million, while the Automation Enabling Technologies segment rose 6.6% after two quarters of declines. Book-to-bill ratio held steady at 1.10, signaling sustained demand. Gross margins compressed slightly, with adjusted gross profit margin at 45.6% compared with 46.2% a year earlier.
Despite the acquisition’s expected accretive impact, Novanta reiterated its full-year guidance for revenue of $1.04 billion to $1.055 billion and adjusted diluted earnings of $3.50 to $3.65 a share. However, the company raised its second-quarter outlook, projecting revenue of $259 million to $264 million and adjusted earnings of $0.81 to $0.86 a share, up from prior ranges. Organic revenue growth guidance for the quarter was lifted to 6% to 8%.
To finance the deal, Novanta completed a $300 million equity raise. Net leverage is expected to rise to 2.7x post-acquisition but is targeted to return below 2.3x by year-end 2027. The company also stopped reporting GAAP net income and EPS guidance, continuing its focus on non-GAAP metrics.