Thank you for joining. We'll just wait a few more moments to allow all participants to enter. Welcome to Aroa Biosurgery's investor webinar and Q&A following the company's June 2025 quarter results announcement released this morning. Please note participants are in a listen-only mode. There will be a short presentation followed by time for questions. If you have a question you would like to submit, please type it in using the Q&A function. We will also be opening the floor to live questions if you would like to do that. When the Q&A session commences, please use the raise hand function on the Zoom app. Please note that this session is being recorded. On behalf of Aroa today, we have Brian Ward, Founder and CEO, and James Agnew, CFO. I will now hand over to Brian and James. Please go ahead.
Thank you, Sarah, and welcome everybody. This is going to be a short presentation this morning, just a brief update based on the release today and our quarterly report. Normal disclosures, disclaimer. In terms of this morning, I'm going to talk briefly about our financial highlights, operational highlights, and then the outlook. Included in the presentation is an overview, some background on our operations and our strategy, but I won't be covering that today. In terms of financial highlights for the last quarter, we've had a really good start to the year. One quarter in and sales performance both on the Myriad and AROA side and on TELA Bio side is tracking in line with our expectations. This is the third consecutive quarter of positive net cash flow. We continue to be in positive territory, which is great. Cash receipts for the last quarter are $22.5 million.
We ended the quarter with a cash balance of $22.2 million, so up $200,000 on the beginning of the year. From a cash flow perspective, really pleased with how things have tracked, probably been more positive than we'd expected to be in the first quarter, which is really encouraging. In terms of operational highlights, Myriad and Endoform sales are up. We've got a strong focus on these products, particularly Myriad, and tracking as we'd expect. OviTex orders have tracked ahead of expectations, which is really positive. TELA remains very confident on the sales outlook and confident on their financial position through the course of the year. We feel good on both sides of the business in terms of where we are year to date.
One thing I did want to mention was proposals from the CMS in terms of reimbursement for cell tissue products or skin substitutes. This affects Symphony. Recently, they released a proposal for some changes to reimbursement for these products. From what they're proposing, it looks very positive for Symphony in FY2026. We have seen proposals from the CMS previously that were not put into place in the following year. At this stage, we're treating this as something that may or may not be put into place. If it is put into place, what we will see is a standard payment rate for all products, that being at $125 per square centimetre, which is very favorable for Symphony.
Also, that payment in all sites of care will be the same, and then there'll be a separate payment for the products and for the surgeon, which has not been the case in the hospital outpatient department and the physician's office. This would be a realignment of payment for these products. From our perspective, a really positive change. It certainly addresses some of the challenges that have been evident in this space for quite some time. We feel that these are probably changes that will come into place, but I'll just temper that a little bit with that there's been a number of occasions where CMS hasn't followed through with the changes. In terms of the outlook, we're reaffirming our guidance for the coming year. $92 million- $100 million in revenue and a normalized EBITDA of $5 million- $8 million.
In terms of our focus this year, our strategy continues to be the same. Focused on large complex wounds and trauma and lower limb salvage. Both of these areas are being targeted with Myriad, strengthening up our Myriad value proposition. That's based on both the clinical evidence that's coming through, but also the financial and operational benefits that Myriad brings to hospitals, driving deeper penetration within the existing accounts that we're in, ramping up our sales faster and increasing the productivity of our sales team and targeting wider use within hospital systems. We have a focus on seeking some standardization within our hospital systems, again, to help drive penetration. In terms of milestones this year, continuing to demonstrate Myriad's distinctive value and why it's a more favorable product compared to other products in this category, securing Symphony reimbursement in the physician's office. This is really based on Symphony RCT.
Completing that RCT is important. We're a long way through that study and expect to ramp that up in the third or fourth quarter of this year. Then one Myriad IDN conversion. This is standardization within a hospital system in the U.S. We continue to track well on that initiative. I'm going to wrap it up there and open it up for questions.
Thank you. We do have a few questions through here now. There is some interest around Myriad, around the revenue growth through the quarter and active accounts. If you could talk to that.
Yeah, look, we don't typically sort of talk to, you know, specific results on quarterly, but I can say that, you know, both our active accounts and our Myriad are up on the prior quarter of last year. I mean, we'll probably provide a more full-time update over half a half year, but we can, you know, comfortably say that, you know, it's in line with expectations and obviously growing, you know, growing at that level, which we expect it to.
Hey, I've just got a question here from Elyse Shapiro. I'm just going to take the unmute off there.
Thanks. I guess just looking at Symphony and, you know, the reimbursement changes that have come through there, how are you thinking about growing the sales team to target both the maybe the out-of-hospital and the clinician office settings? What additional cost do you anticipate from that strategy? Are you just able to leverage the existing team?
Yeah, so we've, you know, we launched Symphony last year and had our team focus on hospital outpatient departments within hospitals that we're in and physicians that we're already working with in the inpatient setting. I think if we sort of roll forward to next year, we'll adopt a similar strategy. If you look back over the last 12 months, the thing that really held us back in terms of success with Symphony was uncertainty in the reimbursement situation, particularly the need for a clinical study. We'll have that clinical study in place, so we should be good to go with that for next year.
In terms of how we target these accounts, I see us doing it in a similar way, not adding to the sales team that we have, using the existing salespeople to focus on predominantly hospital outpatient departments in hospitals that they're already in and then surgeons that they're already working with in the physician's office. The changes are really interesting as they go through. What we've seen over the last 10 or 15 years is migration of patients to physicians' offices because the payment settings were more favorable there. With the changes that are being proposed, it's going to be neutral to surgeons or physicians whether they treat them in the physician's office or in the hospital outpatient department. I think it's going to mean probably we'll see a movement of patients back to the hospital outpatient departments, which would work really well for us.
The proposals, if they go through, are great. They sort of reset the whole environment in a way that sets it up for products that are effective but also offer good value to patients and hospitals.
Got it. That makes sense. I guess just quickly on the numbers as well, you know, with the maintained guidance, what level of flex are you assuming on R&D spend, especially as it relates to Anevo? If you kind of are coming in ahead, would you reinvest more back into R&D or kind of take the profits?
Yeah, I think at the moment we're going to keep our R&D reasonably flat, so we're not going to change it. It's pretty early in the year to do that. The plan would be to stick with the planned level of expenditure. Maybe there's a little bit of flex in the last quarter, but we're really focused primarily on driving the top line result but also delivering on the profitability for the year.
Got it. Thanks.
Okay, we've got a question here from Ross Sheeran. When do you expect to be profitable at a net profit after tax level?
That's a very good question. Look, we could possibly be net profit positive this year. We'll be sort of very close to that at a net profit level. One of the principal reasons why we sort of look at an EBITDA level is we do have a large accounting-based expense that goes through a share-based payment. The accounting treatment's a bit awkward where a lot of that share-based payment has not crystallized, but you don't actually see that come out through the P&L. On a net profit level, based on the guidance, if we're at the upper end of guidance, we should certainly be very close to net profit break even.
Okay, we've just got a question here about if you could comment on the level of account penetration within existing accounts.
It really depends on specific accounts and how long we've been in those accounts. A lot of our accounts, if I have to really generalize, I think 70%-80% of our accounts are still very immature. There is a lot of opportunity for additional penetration within those accounts. We do have some more mature accounts where we're not only in lower limb recon, we're in general surgery and trauma. We've got a small number of accounts that are like that. To a large extent, a lot of them are immature and there's a lot of opportunity for increased penetration.
Okay, just the impact of U.S. tariffs, if you could comment on that again.
Yeah, tariffs, we obviously started paying them on the 1st of April. I think I previously said the impact is not 10% off sales. It's sort of closer to probably 1.5% and 2.5% of sales. That has been factored into our guidance, that expense, on the basis that it continues at that current level of 10%.
Okay, if you could also comment on the challenges and the focus around increasing sales.
Yeah, I think for us, in terms of how do we increase sales, it's sort of simple, really. More continued focus on the key procedures for us, that's lower limb recon and trauma. Essentially, working with the surgeons that we're already working with to use our products in more procedures, but also a greater number of surgeons within the hospitals where we're now present using our products. Surgeons are naturally conservative. They need to see the product work in their own hands, and it takes a little bit of time to build the confidence in order to get increased use. That's a big part of our strategy, just driving increased use with those surgeons in those hospitals.
We're also seeing that we're getting interest from hospital systems in terms of the benefits that we can bring to their wider hospitals that we're not in within those systems, in terms of both the outcomes but also the financial operational benefits. We're working on being able to increase the number of hospitals we're in within hospital systems as well. That's more at a corporate level than at a physician level or surgeon level. We have initiatives at the top of hospitals, but also initiatives on the ground with surgeons at hospitals as well.
Okay, if you could also talk about the increase in revenue this quarter and whether there's further expected increases.
Yeah, you know, as James said, we don't, you know, this is a quarterly. We tend to just focus on cash flows. We don't normally give an update on revenue in the quarterly. We will do that at the half year, but we report our full half year results. I think what we can say is that, you know, we're tracking in line with expectations where we expect to be. We're on plan from a revenue growth perspective, both on the Myriad side and also on the TELA Bio side. I think, as I said earlier, you know, TELA Bio is tracking ahead of where we expected it to be for the first quarter.
Just a question here on the markets outside of the U.S., if you could just talk about the strategy there.
Yeah, so, outside the U.S., we tend to work with local distributors on a country-by-country basis. We're in some jurisdictions in Europe, we're in the Middle East, Southeast Asia, and some countries in South America. These markets are relatively immature. We have seen some good growth over the last 24 months. A couple of markets that I'd call out would be in Canada, which is going really well, and some good growth in Germany as well. Each market's a little bit different. What you tend to see is differences in reimbursement and how these products are paid for, which can affect uptake as well. Most of our focus remains on the U.S., but we are beginning to put more effort into growing the business ex-U.S. as well.
Okay, there's some interest in the view on the likelihood of achieving reimbursement at the close of the Symphony RCT.
Yeah, and look, I think that's going to depend on the outcomes for the RCT. I think if we look across all of our product portfolio where we're using AROA ECM, the outcomes have been really strong. We just published a study in Endoform, showing a difference there in terms of venous lymph gases. We've shown a similar difference with diabetic ulcers as well. If you look at Myriad, we're certainly seeing better outcomes there than you typically see with other comparable products. We're pretty confident about the outcomes for Symphony. That study still needs to run its full course. It's 120 patients; we're at 110 or so that are recruited into the study, but have 10 to secure and finish. Probably the most uncertain thing about the study is just the rate of recruitment. That can be a little bit variable.
We're on track to complete that study towards the end of this year. Based on where we're sitting today, we'd expect to see a good outcome for that. With that clinical outcome, the process is to take that to the MACs and get that added to local coverage to allow for payment. It's not a slam dunk, but I think things are pointing in the right direction for Symphony. If we have that study in hand, we have reimbursement in place, and particularly if we see the changes that have been proposed by CMS, we think we're going to be in a great position next year to capitalize on that.
Okay, there's also some interest in the strategy around IDNs.
Yeah, so we've been, you know, I guess we started off and we're focused, you know, predominantly in hospitals. What we've been able to demonstrate in hospitals is great clinical outcomes with surgeons, but also some significant savings for hospitals as well. They kind of come from a couple of different places. One is the acquisition cost of the product is very affordable, so there's been saving on just the product cost. We're also seeing reductions in the rates of complication, so a lower cost for hospitals in terms of having to treat complications from patients. Thirdly, we're seeing a much lower rate of application of our product. Not only does that save them the cost of the product, but it also saves them the cost of taking the patient back to surgery and having all those increased costs that go with that.
That has been noted by individual hospitals, but also something that has been seen within hospital systems as well. We're now having conversations at a hospital system level where there's interest in what would it mean if I took all of those savings that I'm seeing in one hospital and I was able to scale that across 100 hospitals or 20 hospitals? What would be the difference in cost savings? We've been in discussions with several hospital systems in terms of potentially being able to standardize on Myriad within those hospital systems. There are a couple of things that are required for that to happen. Obviously, an agreement at the IDN or hospital level, but then also there's a rollout process with individual hospitals as well. Obviously bringing surgeons on board and convincing them that that makes sense individually for them. It's a process that we're in.
We see a great opportunity for Myriad to be the product that is the standard for use in inpatient reconstruction, and we're certainly seeing good interest in that.
Excellent. Okay, there are no more questions, so I think we'll conclude the webinar there. Thank you, Brian and James, and thank you everyone for attending.
Great, thank you.