Novanta Inc. Reports Q2 2025 Revenue Growth to $241M Despite Decline in Operating Income

Novanta Inc. reported its financial results for the second quarter of 2025, revealing a total revenue of $241.0 million, a 2.2% increase from $235.9 million in the same period last year. For the first half of 2025, revenue reached $474.4 million, up 1.6% from $466.8 million in the prior year. The growth was primarily driven by contributions from the recent acquisition of Keonn Technologies, which added $5.3 million to revenue, and favorable foreign currency exchange rates that positively impacted revenue by $4.8 million in the quarter.

Despite the revenue increase, Novanta's operating income for the second quarter fell to $14.9 million, a decrease of 42.0% from $25.7 million in the previous year. This decline was attributed to a significant rise in restructuring, acquisition, and related costs, which surged to $12.6 million from $2.5 million a year earlier. Additionally, selling, general, and administrative expenses increased by $2.3 million, and research and development costs rose by $1.6 million. The company reported a net income of $4.5 million for the quarter, down from $13.8 million in the same period last year, resulting in basic and diluted earnings per share of $0.12, compared to $0.38 in the prior year.

Operationally, Novanta's Automation Enabling Technologies segment saw a revenue increase of 4.2% to $121.7 million, driven by higher demand for robotics and automation products. In contrast, the Medical Solutions segment's revenue remained relatively flat at $119.4 million, with a slight increase attributed to the acquisition, offset by decreased sales in precision medicine products. The company’s total assets grew to $1.51 billion, up from $1.39 billion at the end of 2024, largely due to the acquisition of Keonn, which added $44.2 million in goodwill.

In terms of strategic developments, Novanta completed the acquisition of Keonn Technologies on April 8, 2025, for a total purchase price of approximately $75.4 million. This acquisition is expected to enhance Novanta's capabilities in RFID solutions and is included in the Medical Solutions segment. The company also entered into a Fourth Amended and Restated Credit Agreement on June 27, 2025, providing a credit facility of approximately $1.0 billion, which includes a revolving credit facility of $850 million, aimed at supporting future growth and acquisitions.

Looking ahead, Novanta anticipates continued revenue growth driven by its strategic focus on expanding its product offerings and market presence, particularly in the medical and advanced industrial sectors. The company is also addressing macroeconomic challenges, including inflation and supply chain disruptions, while maintaining a disciplined approach to managing costs and enhancing operational efficiencies.