Good morning. My name is Andrea, and I will be your conference operator today. At this time, I would like to welcome everyone to Novanta Inc. Special Announcement Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ray Nash, Corporate Finance Leader for Novanta. Please go ahead.
Thank you very much. Good morning and welcome to this special announcement call for Novanta. This is Ray Nash, Corporate Finance Leader. If you have not received a copy of our press release announcement issued earlier today, you may obtain it from the investor relations section of our website at www.novanta.com. Please note this call is being webcast live and will be archived on our website shortly after the call. Today's webcast is accompanied by a presentation which can be found in the investor relations section of our website. We will reference this presentation throughout our prepared remarks. Before we begin, we need to remind everyone of the safe harbor for forward-looking statements that we've outlined in our press release issued earlier today, and also those in our SEC filings.
We may make some comments today, both in our prepared remarks and in our responses to questions that may include forward-looking statements. These involve inherent assumptions with known and unknown risks and other factors that could cause our future results to differ materially from our current expectations. Any forward-looking statements made today represent our views only as of this time. We disclaim any obligation to update forward-looking statements in the future, even if our estimates change. You should not rely on any of these forward-looking statements as representing our views as of any time after this call. During this call, we will be referring to certain non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is in the appendix to the presentation.
To the extent that we use non-GAAP financial measures during this call that are not reconciled to GAAP measures in the presentation, we will provide reconciliations promptly on the investor relations section of our website after this call. I am now pleased to introduce the Chair and Chief Executive Officer of Novanta, Matthijs Glastra.
Good morning, everybody, and thank you for joining us. We have exciting news to share. Today we're announcing the acquisition of Riverpoint Medical. This is a milestone transaction, our largest acquisition to date, with an extremely strong strategic and financial fit for Novanta. Over the last several years, we have defined a consistent strategy with clear acquisition criteria. We aim to accelerate our exposure to medical end markets, expand recurring revenue streams, drive more sustainable revenue and cash flow growth, and deepen Novanta's position with OEM customers as their trusted innovation partner. Riverpoint Medical meets or exceeds every one of these criteria, creating significant value to our customers and our shareholders. Riverpoint Medical is an elite category leader in high growth, minimally invasive surgical consumables.
They design and manufacture advanced IP-protected private label implantable materials and surgical consumables for leading OEM customers in the high growth segments of sports medicine, cardiovascular, and other minimally invasive and clinical surgical procedures. The majority of Riverpoint's OEM customers are customers of Novanta, sharing the same call points, the same innovation partnerships, and in the same workflows. Upon closing, the acquisition will be immediately financially accretive, with Riverpoint growing revenues and cash flows twice as fast as Novanta with stronger gross margins and adjusted EBITDA margins and with the same asset-light business model. This is a high-quality business with a terrific management team and culture. Combined with its excellent innovation engine, Riverpoint is well positioned to deliver 12%-15% long-term revenue growth. Joining me today to discuss the transaction are John Lesica, our Co-Chief Operating Officer leading our Medical Solutions segment, and Robert Buckley, our CFO.
In turn, we will share the high-level strategic logic, take you deeper into the details of the business, and close with financial details. After our prepared remarks, we will open the call for your questions. For those following along in our posted presentation, we'll start with our strategic logic on slide three, specifically what this transaction will deliver for Novanta shareholders. First, it will accelerate our strategic direction. We have been clear that we want to expand our business mix to medical device and medical consumables to improve the company's sustainable long-term growth and to reduce cyclicality. Riverpoint will increase our exposure to recurring medical consumables from 15% of overall Novanta revenue to 25% of total revenue. Given the strong growth of this segment, we expect it will reach over 30% of Novanta revenue by 2030.
With this business, we're expanding deeper into high growth, minimally invasive surgical segments with many of the same OEM customers we already serve today with proprietary technologies, design and products, and long-term sticky relationships. Riverpoint's tailwinds are durable and structural. Sports medicine volumes are growing as an active aging population drives more procedures. Riverpoint is leading the shift from metal implants to soft fiber-based biomaterial-coated constructs. Their solutions are rapidly gaining share in ambulatory surgical centers, one of healthcare's fastest-growing delivery channels. These trends are secular, playing out over the next decade or more. Combined with its excellent innovation engine, Riverpoint is well-positioned to deliver 12%-15% long-term revenue growth.
Second, based on an early third quarter close, the deal will be immediately financially accretive to earnings per share, and on a pro forma basis, will increase all our key financial metrics, including our gross margins, EBITDA margins, and our long-term organic growth rate. Robert will give you the specifics. Third, it would advance Novanta's in-region manufacturing strategy for North America for our advanced surgery business. Riverpoint will bring to Novanta fully operational, FDA-registered manufacturing facilities in the United States and Costa Rica, which, combined with our advanced surgical sites in the Czech Republic and Germany, will create a regionally balanced manufacturing footprint, delivering customers a lower trade risk, more efficient supply chain, and stronger in-region for region innovation and commercial capability.
Fourth, the acquisition will establish a scalable medical device platform with significant bolt-on acquisition opportunities in both its core applications and adjacent high-growth segments, led by a world-class operating team with a scalable manufacturing and engineering footprint built to generate strong operating leverage and maximize shareholder returns. These four areas of opportunities are just the beginning of what we believe is one of the strongest strategic acquisitions we have made at a time when our core businesses are accelerating with the strongest management teams this company has ever assembled. Riverpoint Medical is the right fit, and we are the right owner. With that, let me hand it over to John Lesica.
Thank you, Matthijs. Riverpoint Medical is the innovation engine behind major new programs at leading surgical OEMs across sports medicine, cardiac interventional, and ortho and trauma. It's a category leader with proprietary technologies, and it mirrors the sticky, designed-in customer relationships Novanta is known for. Here's the key differentiator. Riverpoint holds the 510 clearances for most of its customers' products. That's the strategic moat. When a customer collaborates with Riverpoint on a new surgical anchor or inflatable construct, Riverpoint takes the concept all the way through design, development, regulatory clearance, and volume manufacturing under its own IP. The customer receives an FDA-cleared private label product ready to sell. That sole source design ownership model creates deep customer stickiness that competitors can't easily replicate. The financials reflect that advantage.
$150 million in revenue, more than 50% adjusted gross margins, roughly 40% adjusted EBITDA margins, both above Novanta's current levels, with 12%-15% organic revenue CAGR. Over 80 owned and licensed patents protect the core platforms. The result, a highly recurring business growing revenue at twice Novanta's rate, with profit and cash flow growing at twice our rate as well. This is a rare asset. Moving to slide five. Riverpoint's $2 billion addressable market is anchored in high growth surgical applications, sports medicine, and cardiovascular, riding a powerful med tech mega-trend. The shift from metal and permanent implants to soft, fiber-based, biomaterial-coated, and absorbable constructs. Sports medicine is Riverpoint's largest and fastest-growing segment. The volume drivers, ACL reconstruction, meniscus repair, rotator cuff repair, have aggressively migrated to ambulatory surgery centers over the past five years. ASCs demand efficiency.
All soft, knot-less, single-use constructs that deliver great outcomes reduce OR time and avoid repeat surgeries. Riverpoint is purpose-built for that world. Within sports medicine, their fiber-based anchor platform stands out. Riverpoint is the leading supplier of fiber-based anchors with osteoconductive coating. We see this platform growing at more than 20% annually. The expansion opportunity is clear. Deeper penetration with existing customers, geographical expansion, and extending the technology to additional global OEM accounts. Beyond sports medicine, Riverpoint has established and growing cardiovascular surgical consumables presence, leveraging the same precision fiber braiding competencies, a natural adjacency to build share over time, particularly with Novanta's commercial and regulatory resources behind it. Speaking to slide seven. One of the most important things to understand about this deal, we are not entering an unfamiliar customer base. We're deepening relationships with Novanta's most important customers.
Novanta already sells surgical robotics technologies, insufflators, and fluid management systems to minimally invasive surgery OEMs. Those same leading OEMs are Riverpoint's customers for implantable consumables. We already have relationships with the majority of Riverpoint's customer base. We know how they qualify suppliers, manage regulatory pathways, and think about sole source relationship. That shared foundation gives us confidence when we accelerate growth past post-close. Deepening our share of wallet in the U.S. and helping expand Riverpoint's offering into European CE mark channels. The runway is substantial. Moving to slide seven. This is the right fit at the right time, we are the right owner. Financially, the deal will be immediately accretive when we close to EPS, gross margins, EBITDA margins, and long-term organic growth. It's so rare for a single acquisition to deliver all four. Strategically combining Riverpoint with Novanta doubles our recurring medical business.
On timing, Riverpoint doubled its NPI program volume over the past three years. Those investments are now entering their revenue ramp, we would be acquiring the business as that compounding begins. The recent NPI cycles have also brought in all five top sports medicine and orthopedic OEMs. The best of the growth story is still ahead. Longer term, this acquisition creates a platform. New engineered materials and coatings are increasingly the substrate on which next generation minimally invasive surgery is built. OEMs want partners who can take them from material science through a finished, cleared, globally commercialized component. Riverpoint can do that today. With further investment, this platform can expand into adjacent categories and new markets, Europe in particular. The $2 billion addressable market is the starting point, not the ceiling.
Finally, Riverpoint brings FDA-registered manufacturing scale in the U.S. and Costa Rica, eliminating the need for Novanta to build a North American greenfield facility, saving years and significant capital. Our global presence gives Riverpoint a faster path to Europe and Asia with manufacturing, regulatory, and commercial access that accelerates time to market. We are disciplined acquirers. We evaluate many assets in this space. Riverpoint is the one that delivers on all dimensions: manufacturing footprint, OEM relationships, IP estate, and a growth profile that makes the platform genuinely credible. With that, I'll hand it over to Robert for the financials.
Thank you, John. Let me start with synergies on slide eight. We have identified more than $80 million in cumulative profit and cash flow synergies that we expect to realize over the next five years. For the full year of 2027, we expect cost-only synergies in the $6 million-$8 million range, doubling that rate in 2028. The largest near-term synergy will be avoiding a potential greenfield investment in North America for FDA-registered medical device manufacturing, which we were starting in 2027. This greenfield site would have incurred more than $30 million in cumulative operating losses for the first few years, with more than $20 million in capital expenditures and the potential for further disruptions during the three-year qualification period.
Riverpoint has a world-class manufacturing facility in Costa Rica that not only has the capacity to meet Riverpoint's volume requirements for the next five years without significant new investment, but also has the available capacity, resources, competency, and team to manufacture Novanta's medical consumables within the next 12-18 months. This factory gives us a low-risk solution and ability to dramatically accelerate and shorten the time to establishing North America regional manufacturing for Novanta's medical products for its customers, which insulates our customers from the ongoing trade dynamics while positioning our manufacturing and innovation closer to where they operate. In addition, we expect to drive significant manufacturing cost savings with the implementation of the Novanta Growth System through accelerating other manufacturing transfers by combining our regulatory models and commercial channels, by leveraging the business's operating structure with Novanta's infrastructure to deliver cost efficiencies.
Furthermore, it's important to highlight the 12%-15% organic revenue growth of the business that will have a material compounding effect on our cost reduction and cash flow enhancing initiatives. Finally, it's important to highlight a leading indicator around the future opportunities we are still investigating and exploring. We see a path to realizing more than $10 million of incremental revenue synergies, which is clearly just the start to leverage our global regulatory processes, manufacturing footprint, and commercial channels to cross-sell our combined customer base and bring Riverpoint Medical products to the European market. We have only factored in a small fraction of the anticipated benefits for now as we gauge directly with these customers.
We are truly excited about this opportunity, and we expect to update you later after our first year of integration efforts are completed. While these potential cumulative synergies are the largest cash and cost synergies we have identified in an acquisition, the context that they only represent 5% of revenue and around 5%-8% of combined costs of Riverpoint Medical and our advanced surgery business is important to recognize. This further solidifies the strategic rationale for the deal and highlights the strength of this transaction and why we see Novanta as the perfect owner of this business. Moving on to slide nine, I want to put this deal in context of Novanta's strategic direction.
Over the last decade, we have shifted the portfolio towards less cyclical, more secular, and more predictable growth, which has biased us towards more medical, including minimum invasive and robotic surgery, and towards more subsystems and private label products. Medical today is 53% of Novanta's revenue, up from single digits when we started our transformation, and medical consumable stands at 15% of revenue, which is up from zero a decade ago. The direction we have articulated for 2030 is consistent. More medical, more recurring consumables, higher margins, higher cash flows, and less cyclicality. Riverpoint is one large step in that direction. With this acquisition, Novanta will have more than 60% of its revenue in medical end markets.
We will move recurring medical consumables to roughly 25% of total revenue and nearly $300 million revenue platform, and put the overall platform on a growth trajectory that grows our recurring medical consumables to approximately 30% of total revenues by 2030. This acquisition is a manifestation of our focus and commitment to our strategy to deliver a more predictable, more sustainable, and more consistent organic and profit growth business, which dramatically strengthens our compounding cash flow and capital deployment flywheel strategy. Moving on to slide 10. Let me walk you through the pro forma financial impact. The combination of Riverpoint and Novanta would increase our exposure to the medical end markets from 53% of total sales today to approximately 60% of total sales.
It will increase Novanta's medical consumable sales from 15% of total revenue today to nearly 25% in 2027, and with an expected 12%-15% organic growth rate, it will progress to nearly 30% of sales by 2030. These two factors alone dramatically improve on Novanta's goal to delivering a less cyclical and more consistent revenue and cash flow stream for our investors. In addition, the transaction will give us a business that is expected to grow revenue 12%-15% over the next five years, which will result in a 100 basis point improvement to Novanta's overall organic revenue growth algorithm. Finally, Riverpoint Medical's impact on key profitability metrics in both the short term and long term would establish yet another lever for value creation.
With a gross margin of 50% and adjusted EBITDA margin of approximately 40%, the business would increase Novanta's overall gross margin and adjusted EBITDA margin by 100 basis points each, or better, based on the estimated 2025 pro forma results. Taken in combination with the stronger revenue growth of the business, we expect the business to accelerate Novanta's profit growth by nearly 200 basis points per annum. Because of the asset-light nature of the business, this should also translate into stronger cash flow generation, further enabling the flywheel strategy I just discussed. The acquisition of Riverpoint Medical will be accretive to the most important financial metrics of this company, the same metrics that generate the strong returns for our shareholders. Finally, turning to slide 11. The total upfront transaction payment is $1.2 billion. There is an additional $250 million milestone payment due in the first quarter of 2027.
Over the last six months, the business has already demonstrated a stronger book-to-bill and backlog coverage than our own business, putting it well on track to meet their full year 2026 outlook. We signed the deal last night and expect to close the transaction in the third quarter, subject to customary conditions, including receipt of required regulatory approvals. Riverpoint's strong financial performance, coupled with the combination of a strong strategic and financial rationale, generously puts the transaction on track to delivering a high single-digit return on invested capital by year three and to achieving our hurdle rate by year five. Based on an earlier third quarter close, the transaction will be immediately accretive to 2026 adjusted EPS, and we expect 2027 adjusted EPS accretion of $0.18- $0.25.
The upfront purchase price of $1.2 billion represents approximately 19x Riverpoint's estimated 2026 adjusted EBITDA, excluding synergies, or approximately 17x the estimated 2026 adjusted EBITDA, including the full value of expected year five pro forma synergies. Inclusive of the $250 million milestone payment expected to be paid in the first quarter of 2027. The total purchase price represents approximately 20x the estimated 2027 adjusted EBITDA, excluding synergies, and approximately 15x estimated 2027 adjusted EBITDA, including the full value of the expected year five pro forma synergies. The transaction will be financed through a combination of cash on hand, Novanta's existing credit facility, and a recently successfully completed $300 million equity raise. At the close, pro forma net leverage is expected to be 2.7x, with gross leverage of less than 3x.
Following the $250 million payment in the first quarter of 2027, net leverage will be approximately 2.6x. Because of the strong cash flow generation of the business, we expect to quickly de-lever our balance sheet to less than 2.3x net leverage by year-end 2027. At this time, we are reconfirming our previously issued financial guidance for the most recent earnings call for the second quarter and full year 2026 for Novanta on a standalone basis. Following the close of this transaction, we'll provide updated financial guidance for 2026 and 2027, reflecting the specific financial impact of the acquisition on our previously issued guidance. To conclude, Riverpoint Medical is strategically and financially the most attractive acquisition this company has made in nearly a decade, underwritten by strong cash and cost synergies and a cash earnings accretive outlook.
The acquisition will accelerate Novanta's long-term goal of establishing a more sustainable, predictable, and consistent growth, also by giving the company a higher revenue growth engine within secular high growth medical markets with long-term sustainable trends. I'll now turn it back to Matthijs, and w e'll open it up for questions.
Thank you, Robert. Thank you, John. To wrap up, we found a great company, Riverpoint Medical, a category leader in IP-protected surgical consumables for minimally invasive surgery. It's growing double digits with great margins and cash flow, an NPI engine at full acceleration with deep relationships with leading surgical OEM customers. Its revenue and cash flow growth outlook is double that of Novanta's. This is a high-quality asset serving attractive high-growth end markets, the same markets where Novanta has been operating successfully for years. The micro tailwinds of Riverpoint are durable, sports medicine procedures volume structurally growing, driven by an active aging population. The shift from metal to fiber-based biomaterial-coated construct is accelerating, and ambulatory surgical center adoption is expanding. These trends are secular, playing out over the next decade or so. The commercial story is validated by our customers.
The NPI engine is exciting, the synergies are real, the financials are compelling. With our core businesses accelerating, Novanta compounds by making exactly this kind of move, precisely targeted, deeply diligenced, structurally sound. We've been patient and disciplined. We found the right asset from a large pipeline. Riverpoint is the one that delivers on all our dimensions. We're deploying with conviction. Novanta's trajectory from here is up. Thank you all for joining this call and this morning. Let's open it up for questions.
We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question will come from Lee Jagoda of CJS Securities. Please go ahead.
Hi, good morning, congrats on the deal.
Thanks, Lee.
Thanks, Lee.
I guess just a couple from me. First, just the $250 million milestone payment. What if any conditions need to be met to achieve that?
At this stage, I would say you should presume that payment's going to be made. The business is outperforming the forecast in which they gave us. Initially, when we started the negotiations with them, their book-to-bill was already well above a rate necessary to deliver the results. The backlog coverage was the same. Roughly about 40%+ of their revenue is new product introductions, the business is on a strong revenue growth, profit growth path. At this point, just presume that we're going to be making that payment in the first quarter of 2027.
Perfect. Then you started to answer my second question, but on the 12%-15% CAGR for the growth rate, both going backwards and it sounds like going forwards, how much of that is secular market growth versus their own innovation or share gains?
It's a little bit of a combination of both, but they are selling product into markets that are growing at those rates. When you look at the sports medicine and cardiovascular markets, those are both double-digit growth markets. The growth algorithm for the company kind of mirrors the growth of where the markets in which they participate in. Then you couple onto that there's significant new product introductions this year, next year, and in the proceeding years. The combination of those activities really solidifies that growth algorithm for the next few years.
Perfect. Then, just in terms of their geographic representation, it sounds like they've got a nice North American presence in the U.S. and then in Costa Rica also. How should we think about their revenue today outside the U.S., and how much of that growth.
Great question.
is contemplated in the go forward?
Yeah, that's a great question. I mean, to us, that's one of the big synergies that I think we can bring to them, right? What I mean by that is this is largely a North America business where their revenue is going to North America customer base. They have that FDA-registered product and the qualifications, but they don't have the CE mark to sell the product in the European market. The opportunity set for them is for us to move their manufacturing into our Czech Republic site and begin to get that CE mark on their products. We can do that by still supplying out of Costa Rica, but by getting that CE mark, and that allows our customers in North America to begin selling those products in the European markets, and we can really accelerate that for them.
As much as this gives us an opportunity to move our products into their Costa Rica facility.
[crosstalk] Yeah. Maybe to add, Lee. Maybe to add real quick, it's ultimately also the way to think about it, in addition to Robert's great comments, is remember the World of Medicine business that we bought. It's a very similar playbook. We doubled that business and then further expanded into new applications and customers. Now, that will further compound a little bit in the outer years, but we're very excited. It's not only geographic, but other applications and mutual customers.
Got it. I will let others hop back in. Thanks very much.
Thanks, Lee.
The next question comes from Brian Drab of William Blair. Please go ahead.
Morning. Thanks for taking my questions.
Morning.
Congrats on the deal.
Thanks, Brian.
Yeah. Hey, how do you expect the $80 million in synergies to play out over the five years? Is that weighted more towards the front, or can you talk about that?
Slide eight has a little graph that kind of gives you a little bit of perspective around how you should think about it.
I see.
I did give some guidance in my call, in my script. It's roughly about $7 million in 2027, and then it'll $7 million-$8 million in 2027, and then it'll double that rate in 2028. The graph somewhat depicts that, and then you'll be running at a roughly a $20 million run rate thereafter.
Okay. No, I see that now. Sorry, I missed that.
No, no worries.
And so-
It's about 5% of the revenue of the combined business, is the easiest way to think about it.
Got it. Okay. Then, I guess Lee just mentioned this. I might have missed this too, but specifically the growth rate that you gave, 12%-15% revenue growth, that's the expected go forward growth rate, but can you put a finer point on what the growth has been for this business in year-
Yeah
[crosstalk] days in 2026 and what it was in 2025?
It'll grow in that range in 2026. I want to be careful about giving the growth rates historical, because they're convoluted. This is a combination of an organic growth business with a handful of acquisitions. I don't want to give a misleading perspective on the historical growth figures. I do. You can look at 2026 as being within that range and then having high confidence of 2027 and beyond. A large amount of this has already been locked in with customer contracts.
Okay. Can you give any comments regarding the story of this business and how long you've known them, how long you've been looking at this particular deal?
Sure. Yeah. We've known. It's an interesting business in the structure that it sells into the same customers that we sell to. It sells to the same call points that we sell to. It's in the same workflows that we're in. We've obviously known about them for a number of years. It's a business that has got founders still involved in the business. Management has some involvement in the capital structure. There's a private equity firm involved as well, as obviously in the press release. It's got this professional management team with that financial discipline applied to an entrepreneurial type of business model. We've known them for a while. We've engaged with them for a while. John Lesica, our COO, really solidified the relationship with that management team. They're all planning on staying on board.
They're all planning on continuing to lead this business on a go-forward basis. We feel like we really know the business inside and out at this point.
Got it. Okay. Maybe just one more for now. How does this, and I don't mean to steer away from talking about this acquisition today, but how does this-
Okay
change your perspective on M&A for the next year?
Well, this year, I could safely say we're done.
Yeah.
We'll focus on between now and let's say for the first couple quarters of 2027 is really kind of debt reduction. We're getting strong cash flows out of our base business. Obviously, you saw that in the first quarter. We're getting strong cash flows out of this business. It's an asset-light business. It's got a cash conversion rate that's much higher than Novanta's itself, so it drives a much higher cash earnings ratio than our own business.
We'll focus on that integration. We'll focus on capturing these cost synergies, capturing the potential revenue synergies, working on future design wins with them, really stabilizing it, getting our own medical manufacturing up and running in their Costa Rica facility. All time and attention will be spent on that. By the time we get to the end of 2027, when that leverage ratio drops below to a really low number again to allow us to start doing bolt-on acquisitions, at that point, we'll look to do that into the individual businesses and keep it on a smaller scale at that point.
Okay. Got it. Understood. I'll follow up more later. Thanks very much.
Okay.
Thanks, Brian.
Yep.
This next question comes from Quinn Fredrickson of Baird. Please go ahead.
Hey, good morning, guys. Congrats on the news.
Thanks, Quinn.
Can you.
Thank you.
Yeah. Can you speak a little bit to what the competitive landscape looks like for Riverpoint Medical? Would the primary competitors here be captive OEMs, and maybe what the level of competition from international players is as well, and then any details on customer concentration?
Yeah. First off, let me answer the second one first. Sorry. We were both excited about the business.
Right.
The first is there's not a lot of customer concentration in this business. If you project out over the next five years, you can imagine, like our own advanced surgery business, when you become the lead partner of innovation for your OEM partners, you begin to get a little concentration because the market is concentrated. But I wouldn't say that, given the number of sockets in which we're designed in, the risk is extremely low of any sort of concentration risk on customers that people typically focus in on. In terms of the competitive landscape, think of it very similar to our advanced surgery business. Ultimately, our advanced surgery business, if you go back in time to when we acquired that business, we were roughly 20% of the insufflator market. Today, we're the standard of care, right?
The competitional landscape around that was really about convincing customers that we can be their innovation engine. We can be that supplier of choice. We're the better option than trying to organically build out your own competencies around this. Ultimately, that's the true competition. Sorry, Matthijs, I'll let you go.
No, I think that's well said. I think they're out-innovating, I think, their competition, which is both internal R&D teams of customers, not unlike our advanced surgery business. OEMs appreciate that because they can innovate faster and grow faster with more up-to-date products, right? That's just a result of focusing on a core competence. Within that, they're the leader in the fastest-growing biomaterials-coated, let's say, fiber-based implants, which is in itself the fastest-growing category. They have unique IP, which is, of course, one of the reasons why we were so interested in this company. We feel they have a huge competitive mode. There's not zero competition. There's healthy competition. As you can see at the growth rates and the projected growth rates, they're winning, and they have something unique, and the team is truly stellar.
Very similar in terms of how they work and how they operate with other pieces of Novanta. We feel together, we can really grow this business very nicely.
Thank you. We discussed geographic expansion, but you also mentioned portfolio expansion opportunities. Could you expand a little bit on what that opportunity might look like? If you could discuss the osteoconductive coatings, I think you mentioned growing 20%, just what's the remaining runway and opportunity in that portion of the business?
We quoted in our slide deck, this business addresses about a $2 billion market, and it's a $150 million business, right? It's a fairly fragmented space still, which is very conducive for both organically taking share as well as doing some bolt-ons of particular technologies that are interested. Hopefully, you understand I'm not going to be too precise here, but one of the major reasons why we're also excited is not only the business today, but its buy and build potential going forward. The osteoconductive piece, just to answer that question, think of it as providing some coating to the fiber-based implants that helps the human tissue, the soft tissue, react such that, let's say, the connection with bone is strengthened, so the human body reacts to it such that the connection is strengthened.
As a result, of course, when you have a tear or when you have an issue, that you can get back into kind of playing the sports that you would love to play. Rather doing that metal-based, which of course rubs and is rigid and restricts motion, the fiber-based is a very nice combination of both giving that flexibility but still being rigid. Combined with that special coating, it gives the strength t hat is required as well, that is unique and really kind of integrating it in the patient body. Riverpoint Medical has a unique set of patents in this area. As John said, it's a high growth category. It grows at 20% within their portfolio, and the market is moving towards that category. Leading that category in where the market is going, basically. We expect further additions to this product line and further permutation.
It's just an early start where we are and bright future ahead.
Thanks, guys, appreciate it.
This concludes our question and answer session. I would like to turn the conference back over to Mr. Matthijs Glastra for any closing remarks.
Thank you, operator, and thank you everyone for your questions. We're extremely excited to share with you this announcement for the signing of the acquisition of Riverpoint Medical. To say it again, this is a milestone transaction that represents not only our largest acquisition to date, but also an acquisition with extremely strong strategic and financial fit for Novanta. To summarize, this acquisition accelerates our strategic direction, will be immediately financially accretive when we close, will provide our OEM customers with global manufacturing capabilities, and will establish a platform unlocking future portfolio expansion opportunities. This demonstrates that what we mean when we say that Novanta deploys capital in a disciplined manner. Riverpoint Medical is the right fit, and we're the right owner. In closing, as always, we would like to thank our customers, our shareholders, and especially our dedicated employees for their ongoing support.
I'm also extremely excited to soon welcome all of the Riverpoint Medical employees into the Novanta family. We believe together we will be a great team, and we will grow our businesses together. We appreciate your participation in today's call. I look forward to joining all of you soon at our second quarter 2026 earnings call.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.