Aroa Biosurgery (ARX: $0.645) CEO Brian Ward described the last 12 months as being a breakout year for the company. The company has three growth pillars based on its core Endoform technology. These are the Myriad products, the Ovitex products, which are sold by its distributor in the US TelaBio, and its most recent product, Symphony. However the star performer for the company is Myriad.
Myriad sales increased by 54% to NZ$49 million, in only its fifth full year of sales. The company's direct sales (i.e. excluding TelaBio sales) now contribute to 59% of total sales. The company is becoming less reliant on TelaBio, which contributed to the majority of revenue at the end of 2022, making up 59% of revenue.
Ward said that the reimbursement environment for the Myriad products was stable. These products are used in operations in the in-patient setting for tissue reconstruction.
Market Disruption Expected to Favour Aroa
This contrasts to the market for Symphony, a more recent product for Aroa, which is sold in the out-patient setting. This market is expected to fall in the US from US$10 billion to between US$1-US$2 billion a year following reimbursement and clinical data requirement changes that came into effect in January in the US. This should work in Aroa's favour, with the Symphony product being a lower cost alternative to the overpriced incumbents, some of which are expected to leave the market.
Previously the physician was paid based on a percentage of the product cost. Every product is now reimbursed at a flat fee. Ward believes the high-priced products will not be able to compete and will create a positive disruption in the market that will benefit Aroa. Ward said that these products now need to be backed by evidence.
Aroa is investing NZ$4 million into the sales infrastructure for Symphony. At the end of March the company announced that a randomized controlled study in 150 patients with diabetic foot ulcers had been completed, meeting its primary endpoint of better wound closure than the standard-of-care treatment. The full study results are expected to be published in the next few months. The published results will be an important factor in supporting clinical adoption.
Ovitex: TelaBio Takes Legal Action Against Competitor
The one pillar of the company's business that is underperforming is Ovitex, which is sold by TelaBio. Sales were up just 8% in FY2026 (ending in March for Aroa). In December last year TelaBio initiated legal action against competitor Becton Dickinson for punishing hospitals when they used TelaBio products.
Ward said he is very optimistic about Ovitex sales over the next three to five years.
Financials
Growth for Aroa is expected to come from expanding it regional areas of focus in the US from six to nine, as well as expanding internationally. Good growth has been achieved in the UK.
Revenue for FY2026 was N$106 million, up 23% on the previous year and slightly above expectations. For this year the company is forecasting revenue of between NZ$115 - NZ$125 million.
Normalised EBITDA was NZ$13 million last year. That is expected to fall slightly to NZ$8 - NZ$11 million with a NZ$9 million investment in expansion/building of the Myriad and Symphony markets. This investment is expected to deliver an acceleration in growth in the subsequent year.
Bioshares recommendation: Accumulate
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