Positive Cash Flow and Growing Receipts
Aroa Biosurgery (ARX: $0.46) announced its second consecutive quarter of positive operating cash flow, with a gain of NZ$1.1 million, marking a 32% increase over the prior corresponding period (PCP). The company also reported NZ$0.4 million in cash flow from operating and financing activities. Cash on hand increased slightly, up by NZ$0.1 million to NZ$22 million.
Strong Customer Receipts and Matrix Product Growth
Receipts from customers for the March quarter totaled NZ$20.1 million, reflecting a 12% increase over the PCP. In comparison, the December quarter saw an 8.5% rise over the PCP, reaching NZ$19.5 million. One area showing strong growth is the Matrix product line, which saw a 32% increase in sales compared to the PCP. The company achieved record sales of NZ$2 million in March for this product category.
TELA Bio Sales Growth and Market Disruptions
Aroa’s distributor in the US, TELA Bio, reported a 19% increase in sales over the year, reaching US$69 million. Aroa receives 27% of TELA Bio’s product revenue. However, TELA Bio’s growth in the December quarter was more subdued, with a 4% increase compared to 19%, 11%, and 39% growth in the preceding three quarters. The CEO attributed this slower growth to a "confluence of disruptions." In the 2025 March quarter, TELA Bio's sales grew by 12% to US$18.5 million.
Full-Year 2025 Guidance and US Tariff Impact
Aroa has maintained its full-year 2025 revenue guidance of NZ$81-84 million on a reported-currency basis, indicating a 17-22% increase over full-year 2024. The company also anticipates a normalized EBITDA profit of NZ$2-4 million. While US tariffs on New Zealand products are set at 10%, CEO Brian Ward stated that due to Aroa’s US production arrangements, the actual impact will likely be much lower.
Outlook for 2025 and Ongoing Studies
Aroa expects to continue its revenue momentum throughout 2025 and pass the interim readout of the Symphony study. The MASTRR study, focused on Myriad Matrix and Myriad Morcells, has recruited 268 out of 300 patients across nine centers, with at least one study result expected to be published within 2025.
New Shareholder and Capitalization
This week, Australian Ethical Fund became a significant shareholder in Aroa, acquiring a 5.01% stake in the company. Aroa is currently capitalised at $159 million.
Bioshares Recommendation: Speculative Buy Class A
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