AOTI Inc. Reports 14% FY 2025 Revenue Growth Despite Arizona Medicaid Reimbursement Crisis

AOTI FY 2025 trading update: growth delivered, but Arizona weighs on cash

AOTI has posted an unaudited trading update for the year to 31 December 2025 showing solid top-line progress against a tough US backdrop. Revenue is expected to rise 14% to c.$66.5 million, with Adjusted EBITDA margin in line with consensus. Net debt came in better than expected, although higher year-on-year due to receivables swelling in Arizona.

The big moving part remains Medicaid reimbursement in Arizona. AOTI has been pursuing payment through arbitration – which is working, but slowly – and will pause taking on new Arizona Medicaid patients from 1 April 2026 to limit further exposure while it seeks a resolution.

Key numbers at a glance

Metric	FY 2025 (unaudited)	FY 2024	Consensus
Revenue	c.$66.5 million	$58.4 million	$66.1 million
Revenue growth	14%	–	–
Adjusted EBITDA margin	In line with consensus	–	10.8%
Net debt/(cash)	c.$6.5 million	$(0.9) million	$11.2 million
Arizona Medicaid revenue	c.$9.2 million	–	–
Arizona receivables (year-end)	$15.6 million	$8.2 million	–

Note: figures exclude any potential Arizona-related adjustments on finalisation of the accounts.

Arizona Medicaid reimbursement: what’s going on and why it matters

Arizona’s state Medicaid insurers have been denying payments for more than a year, forcing AOTI into a laborious arbitration route to secure reimbursement. The good news: claims taken to arbitration have been paid in full ($1.1 million). The bad news: it is resource-heavy and slow, and receivables in Arizona ballooned to $15.6 million at year end.

To cap the risk, AOTI will stop treating new Arizona Medicaid patients from 1 April 2026, while trying to protect existing patients. Arizona Medicaid contributed c.$9.2 million of revenue in 2025. All else equal, that represents a clear growth headwind into 2026 if not offset by other channels or if a reimbursement fix is not secured in time.

Importantly, management says the situation is “fluid” and any resolution before the accounts are finalised could trigger adjustments – positive or negative – to the unaudited figures. Translation: don’t be surprised if the final numbers move around the Arizona line items.

Core trading held up: ex-Arizona growth and margins

Strip out Arizona, and Group revenue growth was c.15% in 2025 (versus c.19% in 2024). That is a respectable performance given the wider US healthcare reimbursement headwinds last year. Adjusted EBITDA margin is expected to be in line with the 10.8% consensus, helped by organisational changes implemented after the interim results to sharpen sales productivity and focus on patient outcomes.

Net debt closed at c.$6.5 million, better than the $11.2 million expected by analysts but a swing from net cash in 2024. The increase reflects drawdown under the SWK Funding LLC loan facility to bridge working capital as receivables climbed. Management states there is sufficient cash generation and headroom in the facility to support ongoing working capital needs.

Regulatory catalyst: CMS local coverage determination on the horizon

AOTI continues to expect a CMS local coverage determination (LCD) in the near term. In plain English: this is a Medicare coverage decision. A positive LCD would be a meaningful tailwind for patient access and reimbursement consistency across key US regions. Management calls it potentially transformational – a strong word, but reasonable given the impact Medicare coverage can have on referral patterns and payment certainty.

The therapy at the heart of this – TWO2, AOTI’s non-invasive Topical Wound Oxygen treatment – has an evidence base cited in the RNS, including double-blinded RCTs and real-world studies showing strong reductions in hospitalisations (88%) and amputations (71%) over 12 months for diabetic foot ulcers. That clinical differentiation supports the policy case, but the timing and exact scope of any LCD are not disclosed.

Why this update is a mixed bag for investors

Positives

• Revenue and margin are in line with expectations, showing resilience in a tough US reimbursement year.
• Net debt is better than consensus, despite higher receivables, implying decent underlying cash discipline.
• Operational reset completed, with early signs of improved sales rep productivity.
• Potential near-term CMS LCD could unlock a step-change in reimbursement coverage.

Negatives

• Arizona Medicaid denials have driven a large receivables build, tying up cash and adding uncertainty.
• Pausing new Arizona Medicaid patients from April 2026 removes a c.$9.2 million revenue stream unless the issue is resolved or replaced.
• Unaudited numbers may be adjusted on finalisation, introducing near-term noise.

What to watch next

• Final results on Monday 30 March 2026 – look for cash collection trends, receivables ageing, and any Arizona-related adjustments.
• Arizona negotiations – any sign of a policy or contracting fix to restart clean reimbursements and unwind receivables.
• CMS LCD outcome and scope – timing, coverage specifics, and whether it accelerates adoption.
• Sales productivity – evidence that the commercial reorganisation is lifting growth and margins ex-Arizona.
• Working capital and leverage – pace of receivables conversion and reliance on the SWK facility.

My take: resilient core with a clear catalyst, but cash timing is king

This is a credible performance in a choppy US market. Delivering c.$66.5 million of revenue and margin in line with the 10.8% consensus shows the underlying demand for TWO2 is intact, supported by solid clinical data and international regulatory clearances. Ex-Arizona growth of c.15% is encouraging.

The flip side is cash. Arizona has turned into an expensive waiting game, evidenced by $15.6 million of receivables and the need to draw on the SWK facility. Management’s decision to stop taking new Arizona Medicaid patients is the right call to limit further balance-sheet strain, but it creates a near-term revenue drag if not offset elsewhere.

The prize is the expected CMS LCD. If that lands positively, it could both broaden access and improve reimbursement reliability, potentially more than compensating for Arizona over time. Until then, the share price is likely to track newsflow on receipts, Arizona resolution, and the LCD timeline.

Jargon buster

• Adjusted EBITDA margin – operating profitability before interest, tax, depreciation, amortisation and non-underlying items, as a percentage of revenue.
• Consensus – the average of analysts’ published estimates; here as at 14 January 2026.
• CMS LCD – a Medicare local coverage determination that sets rules for what services are covered in specific regions.
• Medicaid – US state-federal insurance programme for low-income patients; reimbursement policies vary by state.
• Receivables – invoices issued but not yet collected in cash; a build-up can pressure working capital.