Aroa Biosurgery Limited (ASX: ARX) is pleased to announce its results for the first half of the 2024 financial year, which ended on 30 September 2023.
Highlights are listed below. To read the full announcement, click here.
Financial Highlights
• H1 FY24 product sales grew 8% to NZ$31.2 million compared to H1 FY23. Anticipated H2 FY24 product revenue of ~NZ$41-$44 million, representing a ~30-40% increase on H1 FY24.
• 80% increase in high-margin Myriad™ H1 FY24 sales (compared to H1 FY23) to NZ$10.2 million, reflecting the building momentum of AROA’s direct field sales team. Myriad continues to lead growth across the portfolio, accounting for 33% of H1 FY24 total product sales (up from 19% in H1 FY23) and reflecting 67% of AROA’s direct sales mix.[1]
• 37% increase in TELA Bio’s sales of OviTex™ and OviTex PRS during H1 FY24 compared to H1 FY23. However, H1 FY24 product revenue from TELA Bio of NZ$14.9 million was 13% lower than H1 FY23, reflecting a focus on lowering inventory levels and improving inventory management as logistics mature.
• H1 FY24 normalised[2] EBITDA loss of NZ$2.7 million predominantly a result of TELA Bio sales reflecting the transitional impact of inventory management, with an anticipated H2 FY24 normalised EBITDA profit of ~NZ$4-5 million.
• Total reported H1 FY24 revenue inclusive of project fees grew 9% to NZ$31.9 million.
• Product gross margin of 84%, constant with H1 FY23.
• Strong cash balance of NZ$34.0 million as at 30 September 2023 and the Company is debt-free.
• Full-year FY24 guidance updated to a reported basis – NZ$73-76 million total revenue, NZ$72-75 million product revenue (a 19-24% increase on FY23), 85% product gross margin and a normalised EBITDA profit of NZ$1-2 million.[3]
Operational Highlights
• Targeted investment into AROA’s US commercial operations continuing to deliver results and lay the groundwork for increasing profitability beyond FY24. Myriad active accounts[4] grew to 187 at the end of H1 FY24, up from 166 at the end of FY23. Results also reflect deeper penetration within existing accounts.
• In August, AROA submitted a US FDA 510(k) application for Myriad Flow™, a new Myriad product that could be commercialised in combination with the previously US FDA-cleared components of the Enivo™ system.
• To date, five participants in the Enivo pilot clinical study (n=10) have completed treatment and follow-up care, with no clinically relevant seroma or complications reported.
• Seven peer-reviewed clinical studies published in H1 FY24, including a retrospective case series[5] (n=10) published in leading plastic surgery journal, ePlasty indicating that complex traumatic wounds may heal faster, with less complications and require fewer applications, when treated with Myriad than current standard of care.
• Article by interprofessional working group convened by AROA on surgical reconstruction of stage 3 and 4 pressure injuries selected as a finalist for ‘Best Advance in Original Research’ at the 2023 Advances in Skin Wound Care awards (jointly sponsored by the American Professional Wound Care Association and highly regarded peer-reviewed Advances in Skin & Wound Care journal).
• Enrolments into AROA’s Myriad Augmented Soft Tissue Regeneration Registry (‘MASTRR’) continued tracking well during H1 FY24, with 225 participants out of a target of 300 and 9 out of 10 sites recruited. 42 participants (n=120) enrolled across eight study sites for the Symphony™ randomised clinical trial commenced in June.
• Seasoned Life Sciences and pharmaceutical executive, Scott Sherriff, joined AROA’s leadership team as Chief Operating Officer from July.
• Continued investment into expanding AROA’s tissue manufacturing capacity, including taking delivery of an additional freeze dryer to at least double freeze-drying capacity.
• Focus on expanding AROA’s profile across investment communities reflected in an active investor relations schedule during H1 FY24, including presentations at institutional conferences and broker network meetings, and hosting two well-attended investor meetings.
[1] I.e. excluding sales to TELA Bio, Inc (‘TELA Bio’).
[2] Normalised EBITDA is non-conforming financial information, as defined by the NZ Financial Markets Authority, and has been provided to assist users of financial information to better understand and assess the AROA Group’s (“Group”) comparative financial performance without any distortion from NZ GAAP accounting treatment specific to one-off fair value adjustments, one-off transaction costs associated with capital raisings. The impact of non-cash share-based payments expense and unrealised foreign currency gains or losses have also been removed from the profit or loss. This approach is used by Management and the Board to assess the Group’s comparative financial performance. All references in this announcement to ‘normalised EBITDA’ are as set out in this footnote.
[3] This guidance reflects an updated expected NZ$/US$ exchange rate of 0.62 for H2 FY24 and is subject to TELA Bio delivering on its CY23 revenue guidance of US$57-60 million (reflecting 38-45% growth over CY22).
[4] Represents accounts to which sales were made in the applicable period.
[5] Cormican, M T, Creel, N J Bosque, B A, Dowling S G, Rideout P P and Vassy WM (2023). “Ovine Forestomach Matrix in the Surgical Management of Complex Volumetric Soft Tissue Defects: A Retrospective Pilot Case Series. ePlasty, September 2023. The full study is available here.
