AOTI Reports 20.9% Revenue Growth in H1 2025 Despite US Healthcare Challenges

AOTI’s H1 2025: double‑digit growth, tougher US backdrop, and three big validation wins

AOTI, Inc. has posted a solid first half despite a choppy US healthcare environment. Revenue rose 20.9% to $31.8 million, with Medicaid the standout, while profitability held up given the headwinds. Crucially, the Group notched three market access milestones after the period that could pave the way for broader reimbursement, including in the US via Medicare.

Below I break down what moved the numbers, why the validation updates matter, and what to watch next.

Headline numbers and segment mix: Medicaid steps up

Metric (H1 2025)	H1 2025	H1 2024	Change
Revenue	$31,843,000	$26,339,000	+20.9%
Adjusted EBITDA	$3,070,000	$3,391,000	-9.5%
Adjusted EBITDA margin	9.6%	12.9%	-3.3pp
Gross margin	87.7%	87.3%	+0.4pp
Net profit	$248,000	$(3,867,000)	n.m.
Operating cash flow	$(4,693,000)	$(2,220,000)	-111.4%
Cash	$14,366,000	$19,753,000	(period end vs prior H1)
Debt	$19,762,000	$8,433,000	(period end)
Net (debt)/cash	$(5,396,000)	$5,532,000	n.m.
Receivables	$19,738,000	$13,433,000 (FY 2024)	+47.0% vs FY

The mix shifted meaningfully toward Medicaid, which rose 57.1% to $14.0 million and made up 44% of Group revenue. Veterans Administration (VA) revenue was broadly flat, up 2.4% to $17.3 million, as efficiency initiatives at the VA crimped throughput in Q2. “Other” revenue was $0.5 million.

What drove the half: strong Q1, softer Q2 as US initiatives bite

Management flagged a tale of two quarters. Q1 saw approximately 26% growth (c.38% for the three months to March), but Q2 slowed as the US government’s efficiency drive and the One Big Beautiful Bill Act caused reimbursement friction. That affected both VA activity and Medicaid progress outside New York.

Within Medicaid, New York was the engine thanks to a mandated coverage policy for topical oxygen therapy. Arizona is a swing factor: insurers there have delayed payments, inflating receivables to $12.3 million for that state alone. Initial claims have now been paid in full, but the timing of the rest remains a watch‑item.

Profitability resilient, but cash flow hit by receivables and inventory build

Adjusted EBITDA dipped 9.5% to $3.1 million as AOTI invested in its sales force, absorbed listing costs (not in H1 2024), and recorded higher non‑cash CECL provisions. CECL is an accounting requirement to recognise expected credit losses up front – it does not represent cash leaving the business, but it does weigh on EBITDA.

Operating cash outflow widened to $4.7 million, mainly due to the Arizona receivables and a deliberate inventory build to $5.0 million to support growth amid long lead times. Gross margin edged up to 87.7%, helped by the higher‑margin Medicaid mix.

Balance sheet and covenants: more firepower, lower cost of debt

Net debt at period end was $5.4 million, with cash of $14.4 million and total debt of $19.8 million. The SWK Funding loan was upsized by $11.0 million, with the margin reduced to SOFR + 7.75% (from SOFR + 9.50%), maturity extended to February 2029, and interest‑only until February 2027. Management reports significant headroom on covenants for the year, with quarterly tests covering:

• Minimum consolidated unencumbered liquid assets – the greater of $2.0 million and last three months operating burn.
• Minimum last‑twelve‑months revenue – $62.7 million as at 30 September 2025, rising thereafter.
• Minimum last‑twelve‑months EBITDA – $5.5 million as at 30 June 2025, stepping up over time.

Three validation milestones that matter for US coverage

After the period, AOTI ticked off three important market access boxes:

• California Medicaid – Provider ID awarded in the largest US Medicaid market.
• Germany – nationwide treatment recommendation for TWO2 by the G‑BA.
• UK – NICE updated the Diabetic Foot Problems guideline to recommend topical oxygen therapy; TWO2 is available across the NHS via the Advanced Wound Care Framework.

Why this matters: these endorsements are strong predicates for the ongoing US CMS Local Coverage Determination (LCD) process for topical oxygen therapy. A positive LCD would mandate coverage for Medicare – a pool of around 65 million beneficiaries – and typically catalyses broader payer adoption, including Medicaid and private insurers.

AOTI’s evidence base includes double‑blinded RCTs and real‑world studies showing more durable healing of diabetic foot ulcers, with reported 12‑month reductions of 88% in hospitalisations and 71% in amputations. If CMS concludes the data meet the “reasonable and necessary” test, coverage and a national fee schedule would follow. Timing is not disclosed.

Guidance and near‑term trading: growth still on track

Management reiterated July guidance: FY 2025 revenue growth in the mid‑teens and a low double‑digit adjusted EBITDA margin. Trading in July and August was consistent with that trajectory. Near‑term revenue is expected to be led by the VA and New York Medicaid, with other Medicaid states slower until the current US policy transition stabilises.

The Board views the US headwinds as transitional, with the shift to value‑based care ultimately favouring therapies that deliver better outcomes at lower cost – a positioning that fits TWO2’s home‑use profile and published data.

My take: steady execution, meaningful optionality if CMS turns positive

This is a creditable print in a messy US reimbursement backdrop. The good: double‑digit growth, Medicaid momentum, robust gross margin, and improved loan terms that push principal payments out and lower the interest burden. The strategic wins in California, Germany, and the UK strengthen AOTI’s hand with CMS.

The less good: adjusted EBITDA margin compression, a bigger cash drain from receivables, and continued VA disruption into H2 2025. Arizona is the key cash flow swing factor in the short run, and broader Medicaid revenue outside New York looks constrained until payers work through the One Big Beautiful Bill Act changes.

Catalysts and watch‑items for investors

• CMS topical oxygen LCD – any movement from draft to final would be transformational for Medicare access and a strong tailwind for Medicaid and private payers. No timing guidance.
• Receivables resolution in Arizona – sustained cash collections should ease working capital pressure and support EBITDA conversion.
• VA throughput stabilisation – signs that efficiency initiatives have bedded in could re‑accelerate activity.
• International uptake – following G‑BA and NICE endorsements, look for Germany and NHS traction in H2.

Bottom line

AOTI is navigating a tricky US policy moment while continuing to grow and bank external validation. If CMS coverage lands, it could unlock a much larger patient pool and simplify reimbursement – exactly what the model has been built for. Until then, the focus is on disciplined commercial execution in VA and New York, managing receivables, and keeping costs tight. On balance, this update reads constructive with clear, binary upside ahead.