Novanta’s Earnings Call: Record Revenue and Positive Outlook

Novanta ((NOVT)) has held its Q3 earnings call. Read on for the main highlights of the call.

Novanta’s recent earnings call painted a picture of overall optimism, underscored by record revenue achievements and strong growth in new product sales. Despite facing challenges such as organic revenue decline and issues within the Precision Medicine segment, the company’s strategic initiatives and market leadership appear to outweigh these negatives. The call conveyed a positive outlook for 2026, driven by strategic growth initiatives.

Record Revenue and Growth Metrics

Novanta reported a record revenue of $248 million, surpassing its guidance with a 1% increase in reported revenue and a remarkable 60% year-over-year growth in new product revenue. The company also saw a 17% year-over-year increase in customer bookings, highlighting its strong market position and growth trajectory.

Strong Performance in Medical Solutions

The Medical Solutions segment demonstrated robust performance, with revenue increasing by 6% year-over-year and a book-to-bill ratio of 1.1. Notably, the Advanced Surgery business experienced a significant 17% growth year-over-year, showcasing the segment’s strength and potential for future expansion.

Robust Margins and Financial Performance

Novanta’s financial performance was solid, with adjusted gross margins exceeding expectations at 46.5% and adjusted EBITDA margins above 23%. The company also reported a 2% year-over-year increase in adjusted earnings per share, reflecting its efficient operational management.

Successful New Product Launches and Design Wins

The company launched 20 new products year-to-date, with design win activity up 50% year-to-date. New product sales in the Medical Solutions segment grew by over 40% year-over-year, underscoring Novanta’s innovative capabilities and market responsiveness.

Positive Outlook for 2026

Novanta is optimistic about its future, expecting mid-single-digit organic growth for 2026. This growth is anticipated to be driven by strategic investments in AI-driven robotics, automation, and medical technologies. The company is well-positioned to leverage long-term secular trends in these areas.

Organic Revenue Decline

Despite the record revenue, Novanta experienced a 4% decline in organic revenue. This highlights a challenge the company faces in maintaining organic growth amidst its broader success.

Challenges in Precision Medicine

The Precision Medicine segment saw a 4% decline in sales year-over-year, although there was a 3% sequential growth. This indicates some recovery, but challenges remain in achieving consistent growth in this segment.

Lower Operating Cash Flows

Operating cash flows were reported at $8 million, a decrease from $23 million in the previous year. This decline was attributed to temporary factors such as higher cash tax payments and restructuring costs, suggesting potential for improvement in future quarters.

Guidance and Future Expectations

Looking forward, Novanta expects to achieve mid-single-digit organic growth for 2026, supported by strong momentum in its growth platforms and new product launches. The company is strategically focused on AI-driven robotics, advanced surgery, and precision medicine, aiming to capitalize on long-term market trends. Novanta is also advancing its acquisition pipeline while maintaining a disciplined approach to leverage and cash returns.

In conclusion, Novanta’s earnings call reflects a company that is navigating challenges while capitalizing on its strengths. The positive sentiment is driven by record revenues, strong growth metrics, and a strategic focus on future growth areas. Despite some hurdles, Novanta’s outlook remains optimistic, with a clear path set for continued success.