Medical products company UFP Technologies (NASDAQ: UFPT) reported revenue ahead of Wall Street’s expectations in Q3 2026, with revenue rising 11.6% year on year to $172.4 million. Its non-GAAP profit of $2.88 per share was 7.3% above analysts’ consensus estimates.

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“Operationally, we are seeing meaningful improvements across our businesses, including scaling new programs in the Dominican Republic and margin improvements in our legacy UFP operations. We are also seeing strong results from investments we have made to broaden our capabilities. Our 2025 investment in TPI has exceeded our expectations and provides an initial position in injection molding, a technology where we see opportunity to expand across UFP. We have also made significant year-over-year progress at AJR in both the U.S. and the Dominican Republic. However, scheduled program transfers to the Dominican Republic and margin improvement remain behind plan.”

Revenue growth

A company’s long-term revenue performance can indicate its overall quality. Even a weak business can perform well for one or two quarters, but a high-quality one grows for years. UFP Technologies’s 27.2% annualized revenue growth over the last five years was strong. Its growth beat the average healthcare company and shows its offerings resonate with customers.

Long-term growth matters most, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. UFP Technologies’s annualized revenue growth of 18.6% over the last two years is below its five-year trend, but the results still suggest healthy demand.

This quarter, UFP Technologies reported year-on-year revenue growth of 11.6%, and its $172.4 million of revenue exceeded Wall Street’s consensus estimates by 3.2%.

Looking ahead, sell-side analysts expect revenue to grow 5.6% over the next 12 months, according to S&P, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and implies the market sees some success for its newer products and services.

Adjusted operating margin

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses, from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt and taxes.

UFP Technologies has managed its cost base well over the last five years. It demonstrated solid profitability for a healthcare business, producing an average adjusted operating margin of 16.4%.

Looking at the trend in its profitability, UFP Technologies’s adjusted operating margin rose by 3.8 percentage points over the last five years, as its revenue growth gave it operating leverage.

This quarter, UFP Technologies generated an adjusted operating margin of 16%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings per share

We track the long-term change in earnings per share, or EPS, for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

UFP Technologies’s EPS grew at a 36.6% compounded annual growth rate over the last five years, higher than its 27.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into UFP Technologies’s earnings to better understand the drivers of its performance. As we mentioned earlier, UFP Technologies’s adjusted operating margin was flat this quarter but expanded by 3.8 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, UFP Technologies reported adjusted EPS of $2.88, up from $2.39 in the same quarter last year. This beat analysts’ consensus estimates by 7.3%. Over the next 12 months, Wall Street expects UFP Technologies’s full-year EPS to grow 6% from $10.72 to $11.37, according to S&P.

Key takeaways from UFP Technologies’s Q3 results

UFP Technologies delivered a decent quarter, with both revenue and EPS topping analysts’ consensus estimates. Those beats were the key positives in the results. Shares remained flat at $280.27 immediately after the release.

When deciding whether to buy the stock, the latest quarter matters, but much less than longer-term fundamentals and valuation. Read the full research report here (it’s free).