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. 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 and healthcare reform measures; changes in governmental regulations related to our business or products; actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards, and other requirements; our failure to implement new information technology systems successfully; changes in foreign currency rates; our failure to realize the full value of our intangible assets; our reliance on original equipment manufacturer customers; the loss of sales, or significant reduction in orders from, any major customers; increasing scrutiny and changing expectations from investors, customers, governments and other stakeholders and third parties with respect to corporate sustainability policies and practices; the effects of climate change and related regulatory responses; our exposure to the credit risk of some of our customers and in weakened markets; being subject to U.S. federal income taxation even though we are a non-U.S. corporation; changes in tax laws and fluctuations in our effective tax rates; any need for additional capital to adequately respond to business challenges or opportunities and repay or refinance our existing indebtedness, which may not be available on acceptable terms or at all; our existing indebtedness limiting our ability to engage in certain activities; volatility in the market price for our common shares; and our failure to maintain appropriate internal controls in the future. Other important risk factors that could affect the outcome of the events set forth in these statements and that could affect the Company’s operating results and financial condition are discussed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 under the heading “Risk Factors”, as updated in our other filings with the Securities and Exchange Commission. 31 In this Quarterly Report on Form 10-Q, the words “expects,” “intends,” “anticipates,” “estimates,” “believes,” “future,” “plans,” “aims,” “would,” “could,” “should,” “potential,” “continues,” and similar words or expressions (as well as other words or expressions referencing future events, conditions, or circumstances) identify forward-looking statements. Readers should not place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Management and the Company disclaim any obligation to publicly update or revise any such forward-looking statements to reflect any changes in its expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements, except as required under applicable law. Accounting Period The interim consolidated financial statements of Novanta Inc. (the “Company”, “Novanta”, “we”, “us”, “our”) are prepared for each quarterly period ending on the Friday closest to the end of the calendar quarter, except for the fourth quarter which always ends on December 31. Business Overview 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. Reportable Segments We operate in two reportable segments: Automation Enabling Technologies and Medical Solutions. The reportable segments and their principal activities are summarized below. Automation Enabling Technologies The Automation Enabling Technologies segment designs, manufactures and markets laser beam steering and scanning solutions, laser sources, robotic and precision motion, robotic end-of-arm tooling, and bearing spindles to customers worldwide. The segment serves highly demanding applications for advanced industrial processes, advanced industrial and medical robotics, other medical and life science automation applications, and medical laser procedures such as ophthalmology applications. 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. Medical Solutions 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. End Markets We primarily operate in two end markets: the medical market and the advanced industrial market. Medical Market 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. 32 Advanced Industrial Market 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. Strategy Our strategy is to drive sustainable, profitable growth through short-term and long-term initiatives, including: •disciplined focus on our diversified business model of providing proprietary technology to long life-cycle OEM customer platforms in attractive medical and advanced industrial niche markets; •improving our business mix to increase medical sales as a percentage of total revenue by: -introducing new products aimed at attractive medical applications, such as minimally invasive and robotic surgery, ophthalmology, patient monitoring, drug delivery, clinical laboratory testing and life science equipment; -deepening our key account management relationships with and driving cross selling of our product offerings to leading medical equipment manufacturers; and -pursuing complementary medical technology acquisitions; •increasing our penetration of high growth advanced industrial applications, such as laser materials processing, intelligent end-of-arm robotic technology solutions, robotics, laser additive manufacturing, automation and metrology, by working closely with OEM customers to launch application specific products that closely match the requirements of each application; •broadening our portfolio of enabling proprietary technologies and capabilities through increased investment in new product development, and investments in application development to further penetrate existing customers, while expanding the applicability of our solutions to new markets; •broadening our product and service offerings through the acquisition of innovative and complementary technologies and solutions in medical and advanced industrial technology applications; •expanding sales and marketing channels to reach new target customers; •strengthening our operational performance to expand profit margins and enhance customer satisfaction by deploying lean manufacturing principles and advancing strategic sourcing initiatives across our major production sites, while regionalizing our manufacturing footprint and establishing manufacturing centers of excellence to achieve greater efficiency and reduce overall production complexity; and •advancing a people first culture that promotes a growth mindset, cohesive and engaged teams, and continuous employee development to enable long‑term organizational excellence. Significant Events and Updates Second Amendment to the Fourth Amended and Restated Credit Agreement 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. Issuance of Common Shares in Private Placement 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 33 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. Acquisition of Riverpoint Medical 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. We funded the purchase price through $616.0 million of borrowings under the revolving credit facility and delayed draw term loan facility of the Fourth Amended and Restated Credit Agreement, with the remainder funded from cash on hand. Business Environment 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. 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. 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. Results of Operations for the Three and Six Months Ended July 3, 2026 Compared with the Three and Six Months Ended June 27, 2025 Overview of Financial Results 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. 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. 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. 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. 34 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. 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. The following tables set forth external revenue by reportable segment for the periods noted (dollars in thousands): Three Months Ended July 3, June 27, Increase Percentage 2026 2025 (Decrease) Change Automation Enabling Technologies $ 136,215 $ 121,672 $ 14,543 12.0 % Medical Solutions 129,592 119,377 10,215 8.6 % Total $ 265,807 $ 241,049 $ 24,758 10.3 % Six Months Ended July 3, June 27, Increase Percentage 2026 2025 (Decrease) Change Automation Enabling Technologies $ 267,459 $ 244,839 $ 22,620 9.2 % Medical Solutions 256,055 229,576 26,479 11.5 % Total $ 523,514 $ 474,415 $ 49,099 10.3 % Automation Enabling Technologies 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. 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. Medical Solutions 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. 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. Gross Profit and Gross Profit Margin The following table sets forth the gross profit and gross profit margin for each of our reportable segments for the periods noted (dollars in thousands): Three Months Ended Six Months Ended July 3, June 27, July 3, June 27, 2026 2025 2026 2025 Gross profit: Automation Enabling Technologies $ 71,596 $ 58,206 $ 134,352 $ 117,591 Medical Solutions 50,323 49,514 102,498 95,475 Unallocated (1,004 ) (974 ) (2,357 ) (1,966 ) Total $ 120,915 $ 106,746 $ 234,493 $ 211,100 Gross profit margin: Automation Enabling Technologies 52.6 % 47.8 % 50.2 % 48.0 % Medical Solutions 38.8 % 41.5 % 40.0 % 41.6 % Total 45.5 % 44.3 % 44.8 % 44.5 % 35 Gross profit and gross profit margin can be influenced by a number of factors, including product mix, pricing, volume, manufacturing efficiencies and utilization, costs for raw materials and outsourced manufacturing, headcount, inventory obsolescence, fair value adjustments, warranty expenses, logistics and trade related costs, and intangible amortization. Automation Enabling Technologies 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. 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. Medical Solutions 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. 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. Operating Expenses The following table sets forth operating expenses for the periods noted (in thousands): Three Months Ended Six Months Ended July 3, June 27, July 3, June 27, 2026 2025 2026 2025 Research and development and engineering $ 23,968 $ 25,289 $ 47,219 $ 48,527 Selling, general and administrative 59,972 47,103 114,381 92,699 Amortization of purchased intangible assets 6,415 6,871 12,189 12,425 Restructuring, acquisition, and related costs 12,499 12,572 15,104 10,117 Total $ 102,854 $ 91,835 $ 188,893 $ 163,768 Research and Development and Engineering Expenses 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. 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. 36 Selling, General and Administrative Expenses 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. 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. Amortization of Purchased Intangible Assets 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. 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. Restructuring, Acquisition, and Related Costs 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. 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. Operating Income (Loss) by Segment The following table sets forth operating income (loss) by segment for the periods noted (in thousands): Three Months Ended Six Months Ended July 3, June 27, July 3, June 27, 2026 2025 2026 2025 Operating Income (Loss) Automation Enabling Technologies $ 36,592 $ 26,874 $ 67,745 $ 58,363 Medical Solutions 13,607 6,625 30,333 20,654 Unallocated (32,138 ) (18,588 ) (52,478 ) (31,685 ) Total $ 18,061 $ 14,911 $ 45,600 $ 47,332 Automation Enabling Technologies 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. 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. 37 Medical Solutions 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. 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. Unallocated 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. 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. Other Income and Expense Items The following table sets forth other income and expense items for the periods noted (in thousands): Three Months Ended Six Months Ended July 3, June 27, July 3, June 27, 2026 2025 2026 2025 Interest income (expense), net $ (1,106 ) $ (5,815 ) $ (2,949 ) $ (11,459 ) Foreign exchange transaction gains (losses), net $ (801 ) $ (2,744 ) $ (70 ) $ (3,112 ) Other income (expense), net $ (256 ) $ (563 ) $ (329 ) $ (554 ) Interest Income (Expense), Net 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. 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. Foreign Exchange Transaction Gains (Losses), Net 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. 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. 38 Other Income (Expense), Net 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. Income Tax Provision (Benefit) 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. 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. 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. 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. On December 12, 2022, the EU member states agreed to implement the Organisation for Economic Co-operation and Development’s (“OECD”) Pillar Two Model Rules. These rules, which establish a global minimum corporate income tax rate of 15%, have been enacted in most of the jurisdictions in which we operate. We qualify for the transitional safe harbor rules in a majority of jurisdictions in which we operate and are therefore not subject to Pillar Two global minimum tax in those jurisdictions. Where we cannot apply the safe harbor rules, we have estimated the impact of this minimum tax in our effective tax rate analysis. We continue to monitor any legislative developments closely. Liquidity and Capital Resources We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. Our primary ongoing cash requirements are funding operations, capital expenditures, investments in businesses, and repayment of our debt and related interest payments. Our primary sources of liquidity are cash flows from operations and borrowings under our revolving credit facility. We believe our future operating cash flows will be sufficient to meet our future operating and capital expenditure cash needs for the foreseeable future, including at least the next 12 months. The availability of borrowing capacity under our revolving credit facility provides another potential source of liquidity for any future capital expenditures and other liquidity needs. In addition, we have the ability to expand our borrowing capacity by up to $350.0 million by exercising the accordion option under our revolving credit agreement. We may also seek to raise additional capital, which could be in the form of bonds, convertible debt or preferred or common equity, to fund business development activities or other future investing cash requirements, subject to approval by the lenders in the Fourth Amended and Restated Credit Agreement (as amended, the “Credit Agreement”). There is no assurance that such capital will be available on reasonable terms or at all. Significant factors affecting the management of our ongoing cash requirements are the adequacy of available bank lines of credit and our ability to attract long term capital with satisfactory terms. The sources of our liquidity are subject to all of the risks of our business and could be adversely affected by, among other factors, risks associated with events outside of our control, such as economic consequences of geopolitical conflicts, monetary, fiscal, tax or trade policy changes in the U.S. and other countries and their impact on the global financial markets, a decrease in demand for our products, our ability to integrate current and future acquisitions, deterioration in certain financial ratios, availability of borrowings under our revolving credit facility, and other market changes in general. See “Risks Relating to Our Common Shares and Our Capital Structure” included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. 39 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. Our ability to make payments on our indebtedness and to fund our operations may be dependent upon the operating income and the distribution of funds from our subsidiaries. However, as local laws and regulations and/or the terms of our indebtedness restrict certain of our subsidiaries from paying dividends and transferring assets to us, there is no assurance that our subsidiaries will be permitted to provide us with sufficient dividends, distributions or loans when necessary. As of July 3, 2026, $94.8 million of our $718.7 million cash and cash equivalents was held by subsidiaries outside of Canada and the U.S. Generally, our intent is to use cash held in these foreign subsidiaries to fund our local operations or acquisitions by those local subsidiaries and to pay down borrowings under our Senior Credit Facilities. Approximately $69.4 million of our outstanding borrowings under our Senior Credit Facilities were held in our subsidiaries outside of Canada and the U.S. as of July 3, 2026. Additionally, we may use intercompany loans to address short-term cash flow needs for various subsidiaries. Senior Credit Facilities On June 27, 2025, we entered into the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”), consisting of a €65.3 million euro-denominated 5-year term loan facility (the “Euro Term Loans”, a $75.0 million U.S. Dollar denominated 5-year term loan facility (the “U.S. Term Loans”), and an $850.0 million 5-year revolving credit facility (the “Revolving Facility”, and together with the Euro Term Loans and the U.S. Term Loans, collectively, the “Senior Credit Facilities”). The Senior Credit Facilities mature in June 2030 and include an uncommitted “accordion” feature pursuant to which the commitments thereunder may be increased by an additional $350.0 million in aggregate, subject to the satisfaction of certain customary conditions. On November 5, 2025, we entered into an amendment (the “First Amendment”) to the Fourth Amended and Restated Credit Agreement. The First Amendment increases the maximum consolidated leverage ratio permitted thereunder to 3.75:1.00, with a step-up to 4.25:1.00 following a designated acquisition and revised our consolidated leverage ratio definition (as defined in the Fourth Amended and Restated Credit Agreement) allowing for the use of up to $100 million unrestricted cash and cash equivalents as a reduction to consolidated funded indebtedness (as defined in the Fourth Amended and Restated Credit Agreement). On May 15, 2026 (the “Second Amendment Effective Date”), we entered into an amendment (the “Second Amendment”) to the Fourth Amended and Restated Credit Agreement with existing lenders. The amendment establishes $200.0 million of secured delayed draw term loan commitments (“2026 Delayed Draw Term Loan Commitments”), which will be available for borrowing at our option for up to six months after the Second Amendment Effective Date. The delayed draw term loan commitments will mature on June 27, 2030 and shall bear interest at (i) the Base Rate (as defined in the Credit Agreement) plus a margin ranging from 0.00% to 0.75% per annum or (ii) SOFR, SONIA or EURIBOR, as applicable, plus a margin ranging between 1.00% and 1.75% per annum, in each case as determined by reference to our consolidated leverage ratio. In addition, we are obligated to pay a commitment fee on the undrawn 2026 Delayed Draw Term Loan Commitments. The delayed draw term loan commitments will amortize in equal quarterly installments commencing on or around the last business day of the fiscal quarter ending September 25, 2026 at a rate (i) in the case of such amortization payments made on or prior to June 25, 2027, an amount not less than 0.625% of the principal amount of all U.S. dollar term loans outstanding and (ii) in the case of such amortization payments made thereafter, at a rate not less than 1.25% of the principal amount of all U.S. dollar term loans outstanding. We incurred approximately $0.4 million of deferred financing costs in connection with the Second Amendment, which are recorded as a prepaid asset while the facility remains undrawn. Upon drawdown of the delayed draw term loan commitments, the deferred financing costs will be reclassified as a deferred financing asset on the consolidated balance sheet in accordance with ASC 470 and amortized over the remaining term of the Credit Agreement. As of July 3, 2026, we had not exercised any amounts under the delayed draw commitments. On June 8, 2026, we entered into an amendment (the “Third Amendment”) to the Fourth Amended and Restated Credit Agreement. The Third Amendment, among other things, (i) introduced a defined term for a specified acquisition, (ii) amends the interest rate applicable to loans under the Credit Agreement by widening the pricing margin by 0.25% if our consolidated leverage ratio exceeds 3.75 to 1.00 and (iii) amends the financial covenants under the Credit Agreement by (x) increasing the permitted consolidated leverage ratio to 4.00 to 1.00 or 4.50 to 1.00 for four consecutive quarters following a Designated Acquisition (as defined in the Credit Agreement) and (y) decreasing the permitted consolidated fixed charge coverage ratio to 1.00 to 1.00 for the four consecutive fiscal quarters following consummation of the specified acquisition. We incurred approximately $1.9 million of deferred financing costs in connection with the Third Amendment. These costs will be amortized over the remaining term of the Fourth Amended and Restated Credit Agreement. 40 The term loan facilities require quarterly scheduled principal repayments of €1.1 million that began in September 2025 (with respect to the Euro Term Loans), and $0.5 million beginning in September 2026, increasing to $0.9 million in September 2027 (with respect the U.S. Term Loans), with the remaining principal balance of the term loans due on June 27, 2030, if the maturity date of the term loan facility is not otherwise extended. We may make additional principal payments at any time, which will reduce the next quarterly installment payment due. We may pay down outstanding borrowings under our revolving credit facility with cash on hand and cash generated from future operations at any time. As of July 3, 2026, we had $69.4 (€60.8) million outstanding under the Euro Term Loans and $75.0 million outstanding under the U.S. Term Loans. As of July 3, 2026, we had no outstanding revolver borrowings under our Senior Credit Facilities. Borrowings under the Credit Agreement bear interest at the Base Rate (as defined in the Credit Agreement) plus a margin ranging between zero and 0.75% per annum, determined by reference to the consolidated leverage ratio, or SOFR, SONIA or EURIBOR, as applicable, plus a margin ranging between 1.00% and 1.75% per annum, determined by reference to our consolidated leverage ratio. In addition, we are obligated to pay a commitment fee on the unused portion of the Revolving Facility. As of July 3, 2026, we had outstanding borrowings under the Credit Agreement denominated in Euro and U.S. dollars of $69.4 million and $75.0 million, respectively. 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. The Credit Agreement contains various covenants that we believe are usual and customary for this type of agreement, including a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio (as defined in the Credit Agreement). The following table summarizes these financial covenants and our compliance therewith as of July 3, 2026: Requirement Actual Maximum consolidated leverage ratio (1) 4.00 0.57 Minimum consolidated fixed charge coverage ratio (2) 1.25 4.93 (1) Maximum consolidated leverage ratio shall be increased to 4.50 for four consecutive quarters following a designated acquisition, as defined in the Fourth Amended and Restated Credit Agreement. (2) The minimum consolidated fixed charge coverage ratio shall be decreased to 1.00 for four consecutive quarters following a designated acquisition as defined in the Fourth Amended and Restated Credit Agreement. Tangible Equity Units - Amortizing Notes On November 12, 2025, we issued 12,650,000 of our 6.50% tangible equity units (“Units”) at a public offering price of $50.00 per Unit for an aggregate offering of $632.5 million (the “Units Offering”). We received proceeds of $613.0 million after the deduction of the underwriters’ fees and other issuance costs. Each Unit is comprised of a prepaid stock purchase contract and a senior amortizing note. Each purchase contract will automatically settle on November 1, 2028, and we will deliver at least 0.3729, but no more than 0.4662 of our common shares per purchase contract, subject to adjustment based upon the applicable market value of our common shares. Each amortizing note has a principal amount of $8.74 and bears interest at a rate of 6.30% per annum, with a final installment date of November 1, 2028 (“Amortizing Note”). As of July 3, 2026, we had $94.4 million outstanding under the Amortizing Notes. Share Repurchase Plans Our Board of Directors may approve share repurchase plans from time to time. Under these repurchase plans, shares may be repurchased at our discretion based on the ongoing assessment of the capital needs of the business, the market price of our common shares, and general market conditions. Shares may also be repurchased through an accelerated share purchase agreement, on the open market or in privately negotiated transactions in accordance with applicable federal securities laws. Repurchases may be made under certain SEC regulations, which would permit common shares to be repurchased when we would otherwise be prohibited from doing so under insider trading laws. While the share repurchase plans are generally intended to offset dilution from equity awards granted to our employees and directors, the plans do not obligate us to acquire any particular amount of common shares. No time limit is typically set for the completion of the share repurchase plans, and the plans may be suspended or discontinued at any time. We expect to fund share repurchases through cash on hand and cash generated from operations. In February 2020, our Board of Directors approved a share repurchase plan (the “2020 Repurchase Plan”) authorizing the repurchase of $50.0 million worth of common shares. Share repurchases have been made under the 2020 Repurchase Plan pursuant to Rule 10b-18 under the Securities Exchange Act of 1934. We repurchased 88 thousand shares under the 2020 Repurchase Plan for an aggregate purchase price of $10.2 million and an average price of $116.13 per share during the six months ended July 3, 2026. We completed the 2020 Repurchase Plan in the first quarter of 2026. 41 In September 2025, our Board of Directors approved a new share repurchase plan (the “2025 Repurchase Plan”) authorizing the repurchase of an additional $200.0 million worth of common shares. The 2025 Repurchase Plan does not obligate us to acquire any particular amount of common shares. No time limit was set for the completion of the 2025 Repurchase Plan, and the plan may be suspended or discontinued at any time. We repurchased 71 thousand shares under the 2025 Repurchase Plan for an aggregate purchase price of $8.4 million and an average price of $118.08 per share during the six months ended July 3, 2026. As of July 3, 2026, we had $191.6 million available for future share repurchases under the 2025 Repurchase Plan. Cash Flows for the Six Months Ended July 3, 2026 and June 27, 2025 The following tables summarize our cash flows, cash and cash equivalents, and unused and available funds under our revolving credit facility for the periods indicated (in thousands): Six Months Ended July 3, June 27, 2026 2025 Net cash provided by operating activities $ 116,540 $ 46,756 Net cash used in investing activities $ (11,260 ) $ (65,308 ) Net cash provided by financing activities $ 230,476 $ 12,101 July 3, December 31, 2026 2025 Cash and cash equivalents $ 718,650 $ 380,871 Unused and available funds under the Senior Credit Facility $ 1,050,000 $ 850,000 Operating Cash Flows Cash provided by operating activities was $116.5 million for the six months ended July 3, 2026, versus $46.8 million for the prior year period. Cash provided by operating activities for the six months ended July 3, 2026 increased from the prior year period primarily as a result of improved net working capital, advanced payments received from a customer related to a supply agreement, and the reduction of bonus payouts in 2026 following the conversion of 2025 annual bonuses to equity. Investing Cash Flows Cash used in investing activities was $11.3 million for the six months ended July 3, 2026, primarily driven by $11.6 million paid for capital expenditures. Cash used in investing activities was $65.3 million for the six months ended June 27, 2025, primarily driven by $63.2 million of cash considerations (net of cash acquired) paid for our 2025 acquisition and $7.7 million for capital expenditures, partially offset by $5.5 million of cash received from the sale of properties. We expect to use an aggregate of approximately $30 million to $40 million in 2026 for capital expenditures related to investments in new property, plant and equipment for our existing businesses, which includes a significant capacity expansion project in China. Financing Cash Flows Cash provided by financing activities was $230.5 million for the six months ended July 3, 2026, primarily driven by $288.5 million of proceeds from the issuance of common shares in a private placement, net of issuance costs, partially offset by $18.8 million of debt repayments, $18.6 million related to the repurchase of common shares, $12.4 million of payroll tax payments upon vesting of share-based compensation awards, and $4.4 million of contingent consideration payments related to the 2025 acquisition. Cash provided by financing activities was $12.1 million for the six months ended June 27, 2025, primarily driven by $72.8 million of borrowings under our revolving credit facility to fund our 2025 acquisition, partially offset by $41.0 million of term loan and revolving credit facility repayments, $7.2 million of payroll tax payments upon vesting of share-based compensation awards and $6.2 million related to the repurchase of common shares. 42 Critical Accounting Policies and Estimates The critical accounting policies that we believe impact significant judgments and estimates used in the preparation of our consolidated financial statements presented in this periodic report on Form 10-Q 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. There have been no material changes to our critical accounting policies and estimates through July 3, 2026 from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Recent Accounting Pronouncements See Note 1 to Unaudited Interim Consolidated Financial Statements.