AOTI revenue rises 10% as Medicare coverage moves closer

A solid first half, with a bigger opportunity taking shape

AOTI has reported robust first-half trading, with revenue for the six months to 30 June 2026 rising by 10% year-on-year to approximately $35 million.

The more revealing figure is underlying growth of 18%, which excludes Arizona Medicaid. AOTI stopped treating new Medicaid patients in Arizona from 1 April 2026, making the reported comparison less representative of progress elsewhere in the business.

That underlying performance was ahead of the company's previously published guidance for mid-teens full-year revenue growth. Management remains optimistic about the effect of these trends on the second half, although it has not issued revised guidance.

The update also comes shortly after a proposed US Medicare coverage decision for topical oxygen therapy. This could eventually expand AOTI's addressable market significantly, but investors should note that the decision is not final and management does not expect it to materially alter the revenue trajectory in the meantime.

AOTI's key first-half figures

Metric	H1 2026	Comparison
Revenue	c.$35 million	$31.8 million in H1 2025
Reported revenue growth	10%	Year-on-year
Underlying revenue growth	18%	Excluding Arizona Medicaid
Net debt	c.$6.3 million	$5.4 million in H1 2025 and $6.5 million at FY 2025
Cash	c.$13.8 million	$13.4 million at FY 2025
VA share of revenue	c.57%	Not disclosed
Medicaid share of revenue	c.41%	Not disclosed

Cash increased modestly from the financial year-end, while net debt declined from $6.5 million to approximately $6.3 million. AOTI attributed this to strong Veterans Administration performance and improving working capital.

Net debt remains above the $5.4 million reported at the end of the comparable first-half period, however. The interim results should provide more information about cash generation, operating costs and the financial impact of the commercial restructure.

Veterans Administration growth leads the way

The US Veterans Administration, or VA, represented approximately 57% of first-half revenue and delivered growth of around 15% year-on-year.

This is encouraging because the VA is AOTI's largest revenue source. The company said disruption associated with the US Department of Government Efficiency initiatives in 2025 has now largely abated.

That suggests an important operational headwind has eased, allowing the performance of AOTI's core wound-care therapy to become more visible. Continued penetration of the VA is expected to remain one of the company's principal growth drivers until final Medicare coverage is secured.

Medicaid accounted for approximately 41% of revenue. This division delivered underlying growth of around 21% when Arizona was excluded, but reported growth was only approximately 2%.

The gap highlights the impact of the Arizona situation. AOTI ceased treating new Medicaid patients there after 1 April 2026 and is continuing efforts to obtain a formal state coverage policy and recover historical claims. The value and timing of any potential recovery were not disclosed.

Management also said the One Big Beautiful Bill Act continued to affect Medicaid expansion plans. This remains a constraint despite the strong underlying growth being achieved in other Medicaid markets.

Why the proposed Medicare decision matters

After the end of the reporting period, the Centers for Medicare & Medicaid Services, known as CMS, issued a proposed Local Coverage Determination for topical oxygen therapy in the treatment of diabetic foot ulcers.

A Local Coverage Determination, or LCD, sets out whether a service can be covered by Medicare within the relevant framework. The proposal affirms coverage for Medicare enrollees nationwide, but it must first pass through a 45-day public comment period.

CMS is expected to finalise the LCD within a year. AOTI believes the final decision would significantly expand the US addressable market for its TWO2 therapy by opening access to Medicare patients.

The potential benefit may extend beyond Medicare. Management expects a final LCD to support adoption across Medicaid, commercial insurance and managed care markets by strengthening the reimbursement case for topical oxygen therapy.

This is potentially the most important element of the announcement. AOTI already generates meaningful revenue without nationwide Medicare coverage, so gaining reimbursement would add a large new channel rather than replace an existing one.

However, timing is crucial. The LCD remains proposed rather than final, and AOTI currently considers it unlikely that its revenue growth trajectory will change materially until finalisation. Investors therefore should not assume that the announcement will produce an immediate Medicare revenue uplift.

A strong position in a developing treatment category

AOTI describes itself as the clear market leader in topical oxygen therapy, with a 75% market share. Its TWO2 product is the only intermittent topical oxygen wound therapy on the market.

The treatment is designed to support the durable healing of severe and chronic wounds while helping prevent amputations. It can be administered by patients at home, an important part of AOTI's outcomes-based care model.

The company's commercial position matters because it suggests AOTI already has the product, team and market presence needed to pursue wider reimbursement coverage. Management said its existing footprint encompasses the vast majority of the US population.

Chief executive Dr Mike Griffiths also noted that the commercial restructure remains in the early stages of realisation. If revenue continues to grow using the existing operational footprint, there may be scope for operating leverage, where revenue rises faster than the supporting cost base. No profit or margin figures were disclosed in this update, so evidence of that leverage will need to come in future results.

What investors should watch next

There are several clear positives in this trading statement. Underlying revenue growth reached 18%, VA disruption has largely eased, Medicaid growth outside Arizona was strong and net debt improved slightly from the year-end position.

The proposed Medicare LCD adds a potentially significant longer-term catalyst. A final decision could widen patient access and support reimbursement discussions across several US healthcare channels.

The risks are equally clear. Arizona Medicaid continues to drag on reported growth, broader Medicaid expansion faces legislative headwinds and Medicare coverage has not yet been finalised. The process could take up to a year, and AOTI does not expect a material change in its revenue trajectory before completion.

The next scheduled update is the interim results on 30 September 2026. Investors will be looking for detail on profitability, margins, cash conversion, working capital and whether management changes its full-year expectations after an underlying growth rate ahead of guidance.

For now, AOTI's established VA and Medicaid operations are doing the heavy lifting. Medicare represents the larger opportunity, but the investment case over the coming months will still depend on execution in the markets the company already serves.