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.2

 

Runway Buyer, LLC

 

March 31, 2026 (Unaudited)

 

 


Contents

 

 

Page

Condensed Consolidated Financial Statements (unaudited)

 

Consolidated balance sheets

3

Consolidated statement of operations

4

Consolidated statement of member’s equity

5

Consolidated statement of cash flows

6

Notes to consolidated financial statements

7

 

 

 


Runway Buyer, LLC

CONSOLIDATED BALANCE SHEETS

 

 

March 31, 2026

 

December 31, 2025

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

$

6,992,411

$

8,186,215

Accounts receivable, net of allowance of $140,000 and $140,000, respectively

 

27,130,996

 

26,148,089

Inventory

 

26,141,704

 

26,978,934

Prepaid inventory

 

362,775

 

153,609

Prepaid expenses and other current assets

 

831,208

 

1,180,279

Total current assets

 

61,459,094

 

62,647,126

 

 

 

 

Property, plant and equipment, net

 

23,235,298

 

23,319,250

Right of use asset

 

3,806,737

 

3,719,544

Right of use asset-related party

 

2,931,166

 

 

3,143,078

Deposits on equipment

 

610,811

 

414,295

Intangible assets, net

 

90,592,110

 

93,212,110

Goodwill

 

165,234,007

 

165,234,007

 

 

Total noncurrent assets

 

286,410,129

 

289,042,284

 

 

 

 

Total assets

$

347,869,223

$

351,689,410

 

 

 

 

LIABILITIES AND MEMBER'S EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

$

2,388,837

$

3,053,281

Accrued expenses and other current liabilities

 

6,120,636

 

7,353,396

Current portion of lease liability

 

584,726

 

538,485

Current portion of lease liability-related party

 

888,755

 

 

874,126

Income tax payable

 

853,618

 

252,806

 

 

Total current liabilities

 

10,836,572

 

12,072,094

 

 

 

 

Long-term debt, net

 

200,166,576

 

204,970,135

Long-term lease liability

 

3,623,172

 

3,579,644

Long-term lease liability-related party

 

2,201,450

 

 

2,428,923

Deferred income tax, non-current

 

11,679,772

 

11,679,772

 

 

Total noncurrent liabilities

 

217,670,970

 

222,658,474

 

 

 

 

Total liabilities

 

228,507,542

 

234,730,568

 

 

 

 

Commitments and contingencies

 

 

 

 

Total member's equity

 

119,361,681

 

116,958,842

 

 

 

 

Total liabilities and member's equity

$

347,869,223

$

351,689,410

 

The accompanying notes are an integral part of these consolidated financial statements.

3

 


Runway Buyer, LLC

CONSOLIDATED STATEMENT OF OPERATIONS

For the three months ended March 31, 2026

 

 

 

 

 

 

 

Revenues

$

            33,457,338

 

 

 

Cost of goods sold (exclusive of items below)

 

 (13,430,211)

 

Selling, general and administrative expense

 

 (9,032,861)

 

Lease expense

 

(220,262)

 

Lease expense-related party

 

(239,243)

 

Depreciation

 

(1,002,525)

 

Research and development

 

 (2,047,482)

 

 

Income from operations

 

7,484,754

 

 

 

Other expense

 

 

Interest expense

 

 (4,465,262)

Other income, net

 

13,600

 

 

 

Total other expense

 

 (4,451,662)

 

 

 

Income before income taxes

 

3,033,092

 

 

 

Income tax expense

 

 (630,253)

 

 

Net income

$

2,402,839

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4

 


Runway Buyer, LLC

CONSOLIDATED STATEMENT OF MEMBER’S EQUITY

For the three months ended March 31, 2026

 

 

Member’s

 Accumulated

 Member's

 Interest

 Deficit

 Equity

Balance at December 31, 2025

$ 165,312,731

$ (48,353,889)

$ 116,958,842

Net income

—

2,402,839

 

2,402,839

Distributions to members

—

 

—

 

—

Balance at March 31, 2026

$ 165,312,731

 

$ (45,951,050)

 

$ 119,361,681

 

The accompanying notes are an integral part of these consolidated financial statements.

5

 


Runway Buyer, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

For the three months ended March 31, 2026

 

 

 

 

Cash flows from operating activities:

 

 

Net income

$

2,402,839

Adjustments to reconcile net income to net cash provided by

 

 operating activities:

 

 

 Depreciation and amortization

 

3,622,525

 Amortization of debt issuance costs

 

196,441

 Changes in operating assets and liabilities:

 

 

 Accounts receivable, net

 

 (982,907)

 Inventory

 

837,230

 Prepaid inventory

 

 (209,166)

 Prepaid expenses and other current assets

 

349,071

 Right of use asset and lease liability

 

1,644

 Accounts payable

 

 (792,057)

 Income taxes receivable/payable

 

600,812

 Payroll liabilities

 

577,641

 Accrued expenses

 

 (1,611,246)

 Customer prepayments

 

 (199,155)

Net cash provided by operating activities

 

4,793,672

 

 

 

Cash flows from investing activities:

 

 

 Purchases of property and equipment

 

 (987,476)

Net cash used in investing activities

 

 (987,476)

 

 

 

Cash flows from financing activities:

 

 

Payments on term debt

 

 (5,000,000)

Net cash used in financing activities

 

 (5,000,000)

CHANGE IN CASH

 

 (1,193,804)

Cash, beginning of year

 

8,186,215

Cash, end of period

$

6,992,411

 

 

 

Supplemental information

 

 

Cash paid for interest

$

4,268,821

Cash paid for taxes

$

                                   28,941

Non-cash investing and financing activities

 

 

Property and equipment purchased with accounts payable

$

                                 127,613

 

The accompanying notes are an integral part of these consolidated financial statements.

6

 


Runway Buyer, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2026

 

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Basis of Presentation

Runway Buyer, LLC (the “Company”) is a Delaware limited liability company and was formed on June 7, 2019 for the purpose of acquiring Riverpoint Medical, LLC (“Riverpoint”) and is a wholly owned subsidiary of Runway Parent, LLC. Headquartered in Portland, Oregon, Riverpoint is a developer, designer, and manufacturer of medical devices focused on advanced surgical fiber and related technologies, such as bio-absorbable sutures, suture-based implantable devices, advanced needles and high strength medical fiber. Riverpoint’s technologies are used in various markets including wound closure, sports medicine, animal health, cardiology and regenerative medicine. The Company manufactures products in its facilities in the United States and Costa Rica.

On July 23, 2026, Novanta Inc., a Canadian corporation, through indirect subsidiaries, completed the acquisition of all of the issued and outstanding limited liability company interests of the Company for approximately $1.2 billion in cash, subject to customary adjustments based on cash, working capital, debt and transaction expenses of the Company as of the closing of the transaction. In addition, a milestone payment amount of $250.0 million remains payable by Novanta Inc. on or before January 8, 2027.

The consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries, Riverpoint Medical, LLC, Riverpoint Medical CR, SRL, and CP Medical Corporation. All intercompany balances have been eliminated.

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the Company's financial position as of March 31, 2026, and its results of operations and cash flows for the three months ended March 31, 2026.

The condensed consolidated balance sheet as of December 31, 2025 was derived from the audited consolidated financial statements as of that date but does not include all of the information and footnotes required by US GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2025. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2026.

In March 2024, the Financial Accounting Standards Board issued Accounting Standards Update 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. The amendments clarify the application of the scope guidance in Topic 718 to profits interests and similar awards by adding illustrative examples addressing common award features. The Company adopted the amendments on January 1, 2026 using the retrospective transition method. The Company previously accounted for its profits interest unit awards as share-based payment arrangements under Topic 718. Accordingly, adoption of the amendments did not change the Company’s accounting for those awards and did not have a material effect on its condensed consolidated financial statements.

Other than the change mentioned above, there have been no additional material changes to the Company's significant accounting policies from those described in the Company's audited consolidated financial statements as of and for the year ended December 31, 2025. Accordingly, those policies are not repeated herein, and the interim disclosures required by ASC 270 are presented in the notes below.

Revenue Recognition

Contract assets related to revenue were $163,876 and $245,086 as of March 31, 2026 and December 31, 2025, respectively. Contract assets are included in prepaid expenses and other current assets. The Company's contract assets represent unbilled amounts arising when the Company has transferred control of goods to a customer but has not yet issued an invoice; such amounts are reclassified to accounts receivable once the right to consideration becomes unconditional. Contract liabilities consist of payments from customers in advance of satisfying performance obligations. Contract liabilities

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Runway Buyer, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

For the three months ended March 31, 2026

related to customer prepayments and accrued customer rebates totaled $1,310,908 and $3,312,226 as of March 31, 2026 and December 31, 2025, respectively.

The following table presents revenue disaggregated by geography during the three months ended March 31, 2026:

 

 

Three months ended March 31, 2026

 

 

 

United States

$

27,879,273

Rest of Americas

 

2,151,231

Europe

 

1,978,767

Asia

 

1,040,390

Other

 

407,677

 

 

 

Total

$

33,457,338

 

Fair Value of Financial Instruments

The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values because of the short-term maturities of these instruments. The Company's long-term debt bears interest at variable rates that reset periodically with prevailing market rates; accordingly, the carrying amount of the Company's long-term debt approximates its fair value as of March 31, 2026 and December 31, 2025. The fair value of the Company's long-term debt is categorized within Level 2 of the fair value hierarchy. There were no transfers between levels of the fair value hierarchy during the three months ended March 31, 2026.

NOTE 2 – supplemental balance sheet information

Inventories, net of reserve of $820,426 and $989,667 as of March 31, 2026 and December 31, 2025, respectively, consisted of the following:

 

March 31, 2026

December 31, 2025

 

 

 

Raw materials

$ 21,918,951

$ 22,916,340

Work in process

1,824,272

1,300,001

Finished goods

2,398,481

2,762,593

 

 

 

Total inventory

$ 26,141,704

$ 26,978,934

 

Accrued expenses and other current liabilities as of March 31, 2026 and December 31, 2025, respectively, consisted of the following:

 

March 31,

2026

December 31, 2025

 

 

 

Payroll liabilities

$ 3,715,884

$ 3,138,243

Accrued rebates

233,754

2,035,917

Customer prepayments

1,077,154

1,276,309

Other

1,093,844

902,927

 

 

 

Total accrued expenses and other current liabilities

$ 6,120,636

$ 7,353,396

 

8

 


Runway Buyer, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

For the three months ended March 31, 2026

NOTE 3 - PROPERTY AND EQUIPMENT

The estimated useful lives, cost, and accumulated depreciation of property and equipment as of March 31, 2026 and December 31, 2025 are as follows:

 

Useful Life

March 31, 2026

December 31, 2025

 

 

 

 

Leasehold improvement

15 - 40 Years

$ 10,169,372

$ 9,994,085

Cleanroom equipment

5 - 10 Years

3,339,320

3,292,866

Production equipment

7 - 10 Years

16,665,039

16,125,430

Molds and dyes

7 Years

862,727

862,727

Office equipment

5 - 7 Years

1,612,700

1,583,707

Furniture and fixtures

7 Years

846,260

829,114

 

 

 

 

 

 

33,495,418

32,687,929

 

 

 

 

Less: accumulated depreciation

 

(11,358,331)

(10,355,807)

 

 

 

 

 

 

22,137,087

22,332,122

 

 

 

 

Construction in progress

 

1,098,211

987,128

 

 

 

 

Total property and equipment, net

 

$ 23,235,298

$ 23,319,250

 

Depreciation expense was $1,002,525 for the three months ended March 31, 2026.

NOTE 4 - INTANGIBLE ASSETS

Identifiable intangible assets consist of the following as of March 31, 2026 and December 31, 2025:

 

March 31, 2026

December 31, 2025

 

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Amortizable intangible assets:

 

 

 

 

 

 

Customer relationships

$ 134,300,000

$ (60,021,640)

$ 74,278,360

$ 134,300,000

$ (57,497,473)

$ 76,802,527

Developed technology

4,400,000

(2,086,250)

2,313,750

4,400,000

(1,990,417)

2,409,583

Amortizable intangible assets

138,700,000

(62,107,890)

76,592,110

138,700,000

(59,487,890)

79,212,110

Non-amortizable intangible assets:

 

 

 

 

 

 

Trade name

14,000,000

—

14,000,000

14,000,000

—

14,000,000

Total intangible assets

$ 152,700,000

$ (62,107,890)

$ 90,592,110

$ 152,700,000

$ (59,487,890)

$ 93,212,110

 

The weighted average remaining useful life of the intangibles was approximately 8 years as of March 31, 2026 and December 31, 2025, respectively.

Amortization expense was $2,620,000 for the three months ended March 31, 2026 and is included in Selling, general, and administrative expenses.

The net carrying amount of identifiable intangible assets was $90,592,110 as of March 31, 2026. The detailed composition of intangible assets by cost and accumulated amortization as of December 31, 2025 is presented in the Company’s audited

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Runway Buyer, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

For the three months ended March 31, 2026

consolidated financial statements; there were no material changes in the composition of intangible assets during the three months ended March 31, 2026 other than amortization recognized in the ordinary course.

 

Estimated future amortization expense for the five succeeding years and thereafter is as follows:

Year Ending December 31,

 

 

 

2026 (remaining nine months)

$ 7,860,000

2027

10,480,000

2028

10,480,000

2029

9,929,998

2030

9,380,000

Thereafter

28,462,112

 

 

 

$ 76,592,110

NOTE 5 - GOODWILL

The goodwill balance was $165,234,007 and $165,234,007 as of March 31, 2026 and December 31, 2025, respectively.

NOTE 6 - LONG-TERM DEBT

The Company has a Credit Agreement with a syndicate of participating lenders, as amended, providing for a term loan and a revolving line of credit with availability of $20,000,000. Borrowings under the term loan bear interest at a variable rate of SOFR plus a leverage-based margin ranging from 4.5% to 6.00%, and the facility matures on June 21, 2027.

Long-term debt consists of the following at March 31, 2026 and December 31, 2025:

 

March 31, 2026

December 31, 2025

 

 

 

Note payable in quarterly installments payments of $447,202 due in full June 21, 2027, interest at SOFR plus 4.5% - 6.00%.

$ 201,129,155

$ 206,129,155

Line of credit, interest at SOFR plus 4.5% - 6.00%.

—

—

 

 

 

 

201,129,155

206,129,155

Less: debt issuance costs

(962,579)

(1,159,020)

 

 

 

 

200,166,576

204,970,135

Less: current portion of long-term debt

—

—

 

 

 

 

$ 200,166,576

$ 204,970,135

 

During the three months ended March 31, 2026, the Company made voluntary prepayments on its term loan in excess of the required scheduled principal payments. As a result, no principal payments are contractually due within the next twelve months as of March 31, 2026, and therefore no current portion of long‑term debt is presented on the consolidated balance sheet. The Company does not incur commitment fees, and no special withdrawal conditions exist beyond standard default provisions.

The line of credit requires payment of a fee payable to each lender party to the agreement, in proportion to that Lender’s pro rata share in respect of the line commitments equal to the average of the daily excess of the line of credit availability over the aggregate principal amount outstanding on the line of credit multiplied by 0.375% per annum.

The loans contain a maximum leverage ratio as part of the debt covenant. The Company was in compliance with all covenants as of March 31, 2026. Substantially all the assets of the Company are pledged as collateral to the Credit Agreement. The Credit Agreement requires the Company to maintain a maximum consolidated total leverage ratio not to

10

 


Runway Buyer, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

For the three months ended March 31, 2026

exceed 8.00:1.00, tested on a quarterly basis. The weighted-average interest rate on the Company's outstanding borrowings was 9.00% as of March 31, 2026. The Company's obligations under the Credit Agreement are secured by a first-priority lien on, and security interest in, substantially all of the Company's assets, including accounts receivable, inventory, equipment, intellectual property, and the equity interests of its subsidiaries. There were no covenant violations as of March 31, 2026.

Other than the principal repayment, there were no significant changes in the Company’s long-term debt or other financing arrangements during the three months ended March 31, 2026.

Minimum future principal payments of debt are as follows:

Year Ending December 31,

 

 

 

2026 (remaining nine months)

$ —

2027

201,129,155

2028

—

2029

—

2030

—

Thereafter

—

 

 

 

$ 201,129,155

NOTE 7 - MEMBERSHIP INTERESTS

Runway Buyer is wholly owned by Runway Parent, which is represented by a membership interest of $165,312,731 as of March 31, 2026.

NOTE 8 - INCOME TAXES

The Company's provision for income taxes for the interim period is determined using an estimated annual effective tax rate, adjusted for discrete items recognized in the period, in accordance with ASC 740-270. The Company's effective tax rate was 20.8% for the three months ended March 31, 2026. The effective tax rate differs from the U.S. federal statutory rate of 21% primarily as a result of state taxes and net CFC tested income, offset by foreign-derived deduction eligible income deduction, the Costa Rica tax holiday, and federal tax credits.

As of March 31, 2026, the Company had no federal and state net operating loss carryforwards. For uncertain tax positions, the Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured as the largest amount of liability that is greater than 50% likely of being realized upon ultimate settlement. The Company’s policy is to record tax related interest and penalties within the tax provision. As of March 31, 2026, there are no interest and penalties that relate to uncertain tax positions. As of March 31, 2026, the Company had no unrecognized tax benefits, and accordingly a tabular reconciliation of the beginning and ending balances of unrecognized tax benefits has not been presented. The Company does not expect a significant change in unrecognized tax benefits within the next twelve months. The Company’s foreign operations benefit from a tax holiday, which is set to expire in 2030. This tax holiday may be extended when certain conditions are met or may be terminated early if certain conditions are not met. The tax benefit attributable to this tax holiday, before taking into consideration other U.S. tax provisions, was $80,790 for the three months ending March 31, 2026.

The Company is subject to federal and state income tax. The years that remain subject to examination are 2020 and later for federal and state purposes.

11

 


Runway Buyer, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

For the three months ended March 31, 2026

NOTE 9 - RELATED PARTY TRANSACTIONS

The Company leases its production facility, offices, and a warehouse from a member under an operating lease. The lease requires monthly payments of $58,726 escalating annually by 3%. The current non‑cancellable lease term extends through June 2029 and includes two additional renewal options of five years each. The renewal options are not included in the measurement of the related right‑of‑use asset and lease liability, as the Company is not reasonably certain to exercise the renewal options as of the balance sheet date. If the Company elects to exercise a renewal option, the lease will be remeasured at that time. The Company made lease payments of $176,177 to the member for the three months ended March 31, 2026. ROU asset and lease liability related to the member was $2,126,824 and $2,252,432 as of March 31, 2026 and $2,279,238 and $2,406,060 as of December 31, 2025, respectively.

In 2023 the Company entered into a new operating lease for an office space with Butler Block LLC., which is a related party entity. The lease requires a monthly payment of $21,332 escalating annually by 3%. The current non‑cancellable lease term extends through June 2029 and includes three additional renewal options of five years each. The renewal options are not included in the measurement of the related right‑of‑use asset and lease liability, as the Company is not reasonably certain to exercise the renewal options as of the balance sheet date. If the Company elects to exercise a renewal option, the lease will be remeasured at that time. The Company made lease payments of $63,997 to this member for the three months ended March 31, 2026. The ROU asset and lease liability related to this member was $804,342 and $837,773 as of March 31, 2026 and $863,840 and $896,989 as of December 31, 2025, respectively.

During the three months ended March 31, 2026 the Company made $97,420 of inventory related purchases with Western Filament, Inc, a related party entity.

NOTE 10 - LEASES

The Company has operating leases for corporate offices, warehouses, parking lots, and equipment with terms expiring approximately one year to five years from reporting date, some of which include options to extend the lease.

 

March 31, 2026

December 31, 2025

 

 

 

Operating lease right-of-use assets

$ 3,806,737

$ 3,719,544

Operating lease right-of-use assets – related party

2,931,166

       3,143,078

Operating lease liabilities

(4,207,898)

(4,118,129)

Operating lease liabilities – related party

(3,090,205)

(3,303,049)

Current lease liabilities

(584,726)

(538,485)

Current lease liabilities – related party

(888,755)

(874,126)

Long-term lease liabilities

(3,623,172)

(3,579,644)

Long-term lease liabilities – related party

(2,201,450)

(2,428,923)

 

The Company did not incur variable or short‑term lease costs during the periods presented. Accordingly, all lease costs recognized relate to fixed payments under operating leases. For the three months ended March 31, 2026, total operating lease costs were $459,505. The weighted-average remaining lease term was 5.23 years and the weighted-average discount rate was 3.8% as of March 31, 2026. As of December 31, 2025, the weighted-average remaining lease term was 5.31 years and the weighted-average discount rate was 3.7%.

Total cash paid for operating lease liabilities was $387,421 for the three months ended March 31, 2026.

NOTE 11 - CONCENTRATIONS

The Company had two customers with over 10% of total sales accounting for 39% of total sales for the three months ended March 31, 2026. As of March 31, 2026, two customers accounted for 44% of the total accounts receivable balance. There were no vendors with over 10% of total purchases for the three months ended March 31, 2026.

12

 


Runway Buyer, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

For the three months ended March 31, 2026

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Purchase Commitments

There have been no material changes to the Company’s purchase commitments since December 31, 2025.

Legal Proceedings

The Company is subject to various claims, disputes, and legal proceedings that arise in the ordinary course of business. Management assesses the likelihood of any adverse outcomes and records a loss contingency when a loss is both probable and reasonably estimable. Management does not believe that the ultimate resolution of any currently pending matters will have a material adverse effect on the Company's financial position, results of operations, or cash flows. As of March 31, 2026, no material amounts have been accrued for loss contingencies.

NOTE 13 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through October 2, 2026, which is the date these unaudited condensed consolidated financial statements were issued.

On July 23, 2026, Novanta Inc., a Canadian corporation, through indirect subsidiaries, completed the acquisition of all of the issued and outstanding limited liability company interests of the Company for approximately $1.2 billion in cash, subject to customary adjustments based on cash, working capital, debt and transaction expenses of the Company as of the closing of the transaction. In addition, a milestone payment amount of $250.0 million remains payable by Novanta Inc. on or before January 8, 2027. On July 23, 2026, in connection with the closing of the acquisition, the Company’s outstanding bank indebtedness was paid in full out of the purchase price proceeds.

13