Wound healing products company Aroa Biosurgery (ARX: $1.10) is proving to be a very predictable performer, meeting or exceeding its sales forecasts.
For the first half of its 2023 financial year (ending 30 September) the company achieved a 44% growth in sales to NZ$29 million. The company is forecasting to be EBITDA neutral by the end of March next year.
The company continues to slowly build its US sales staff, which was last reported as 35 and due to increase to 41 by the end of March. Its total staff count is 245.
Gross margins continue to increase for the company as its sales of higher margin Myriad products increase. Its licensee for its Ovitex products, TelaBio, also continues to deliver with sales growth of between 43% - 53% expected for 2022. The Ovitex products are used for hernia repair and breast surgery. The recurrence rates when the Ovitex products are used in hernia is only around 2%, compared to competing products which range from 10% - 30% implant failures.
Aroa is forecasting sales for FY2023 of between NZ$60 - NZ$62 million, which will be a minimum growth of 54% for the year. This follows an 81% growth in product sales in the previous year.
Aroa continuers to innovate and develop wound healing products using its core technology for new applications. The Symphony product line, for the treatment of chronic wounds such as diabetic foot ulcers, is due to be formally launched in the US in April next year. Another product line in development is Enivo, which combines the Aroa technology with a vacuum pump for management of post-surgical, dead tissue space.
The company finished the last quarter with a cash balance of NZ$50.1 million and is capitalized at $375 million.
Bioshares recommendation: Speculative Buy Class A
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