Welcome to Aroa Biosurgery's Investor webinar and Q&A following the company's September 2025 quarter results announcement released this morning. Please note, participants are in a listen-only mode. There will be a presentation lasting approximately 15 minutes, followed by a Q&A session. The webinar will conclude at approximately 9:30 A.M. Australian Eastern Daylight Time. If you have a question you would like to submit, please type it in using the Q&A function. We will also open the floor to live questions if you'd like to do that. When the Q&A session commences, please use the raise hand function. 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.
Great, thank you Sarah, and welcome to our Q2 quarterly cash flow. A relatively short presentation this morning, just financial highlights and a few operational highlights. Just a normal disclaimer. We do have some materials in the pack that we're releasing to the ASX, which, if you're new to Aroa, provide further information on operations, strategy, and just an overview of the company. Please refer to that if you require further information. In terms of financial highlights, we've had a really good quarter over the last three months. Operating cash flow, AUD 2.1 million. Our cash receipts from customers, AUD 23.5 million. A very solid sales performance across both the Aroa Direct team, but also with TELA Bio as well. That's led to the last quarter being our fourth consecutive quarter of positive net cash flows. We're delighted to be able to deliver that.
That's come on the back of good growth, but also discipline around the control of our expenses. We see ourselves in a strong position going forward and having the ability to both manage growth, profitability, but also our cash position. Thrilled to be able to deliver that. We end the quarter with an increase in cash by AUD 1.3 million- AUD 23.4 million. Continue to be in a strong cash position. From an operational perspective, record Myriad sales over the last quarter. Myriad continues to gather momentum. We're very pleased with how our direct sales team is performing. I see a lot of opportunity for Myriad growth going forward. From a TELA Bio perspective, over six orders tracking to expectations. Still a very strong outlook for TELA Bio over the year, and sales to continue to track as we had expected.
TELA remains confident about their sales outlook and also their financial position. I feel like we're in good shape on the TELA Bio side. With our Symphony product, as many of you will be aware, we've been undertaking a randomized control trial comparing Symphony to the standard of care in diabetic foot ulcers. All of the patients are now recruited into that study. The final patient will end the study at the end of November. That's over 120 patients. The study's being run in order to be eligible for reimbursement in the skin substitute category in the U.S. We're confident of a good outcome here, and that will then provide us with the data that we need to take to CMS in order for Symphony to be reimbursed. As many people on the line will know, there's a state of flux with reimbursement for skin substitutes in the U.S.
There's been some proposals to amend how reimbursement will work for these products and move from a system where physicians were compensated based on a percentage of the price of the products to a system whereby there's a flat price for all products. We're strong supporters of the proposal for this change, and we expect to hear whether this change is going to be implemented in November. If it is implemented, then it would come into place on January 1, 2026. These proposals have been made previously by CMS and not gone through. We're optimistic that it'll go through, but we won't know until November that it definitely will go through. If you look forward and sort of think about this for Aroa, we think that if the proposals do go through, we're in a very good place to capitalize on that opportunity.
We know that Symphony, you know, performs well in the studies that were done prior to our RCT. We think there's a very nice complementary portfolio here between our Symphony and our Endoform product, and that's something that we can capitalize on. We're working on our commercial strategy and organization for this rollout and planning to relaunch this Endoform Symphony package in January next year. The other highlight from the last quarter has been ongoing peer-reviewed publications that continue to be published, whether they're studies that have been initiated by the company or independently from other investigators. What we see is Myriad continuing to be used across a wide range of different applications or procedures and having very good outcomes. One highlight from the last quarter is a book chapter that has recently been published on our core technology, Aroa ECM or OviTex Full Stomach Matrix.
This book chapter appears in a new publication, a new book called Regenerative Biomaterials: Emerging Biomaterial Solutions to Aid Tissue Regeneration. It really brings together a lot of the preclinical and clinical data to demonstrate why Aroa ECM and the Aroa products are quite different from other products or other technologies where bioscaffolds are used. The publication clearly lays out a framework for thinking about soft tissue reconstruction bioscaffolds and kind of categorizes those scaffolds into three categories. The first category is first-generation bioscaffolds or what we call bio-inert bioscaffolds. When you think about these materials, there are three factors that are really important. That is the structure of the scaffold, the biology that it brings to healing to aid tissue regeneration, and whether it's compatible with the human immune system. If you think about first-generation bioscaffolds, these are bioscaffolds based typically on synthetic materials. They are synthetic biologics.
What I mean by that is products where they take a biologic product but reconstitute it into a synthetic product. What these products bring to healing is structure, and that structure supports cells to migrate into a wound deficit, infiltrate it, and lay down new tissue. What they don't bring to healing is biology to help aid tissue regeneration or compatibility with the human immune system. You tend to see with these scaffolds healing that doesn't happen as quickly, but also healing that's more of a scarring type response rather than a pro-healing response. Any of the synthetic materials tend to drive this type of healing. As these technologies have evolved, we've moved towards these second-generation bioscaffolds. Second-generation bioscaffolds are what we call bioactive bioscaffolds. They don't tend to have much structure, so they provide some support for cell infiltration.
What they do bring to healing is biology, so that biology to interact with cells to help improve healing. They're also compatible with the human body immune system so that you don't tend to elicit a foreign body reaction like you would see with first-generation bioscaffolds. These are the early ECM products. Some of the products that were developed 10, 20 years ago used tissues that were decellularized and then used as the basis for building new bioscaffolds. What Aroa Biosurgery has done is developed what's called a third-generation bioscaffold. These are bioresponsive bioscaffolds. They really address all three of these key factors for tissue healing. It provides structure, so structure that will support the infiltration of cells, biology, biology that complements the biology that's already within the patient and helps boost that and augment healing, but then also compatibility.
What we see with Aroa ECM bioscaffold is that it elicits a pro-healing response. When the human immune system sees Aroa ECM, it directs cells to a response that's typically seen during a normal healing response. It doesn't elicit a foreign body response, and therefore, we get rapid healing and the laying down of site-appropriate tissue, not tissue that tries to wall off a foreign body. I wanted to talk about this briefly to highlight that Aroa ECM is quite different from other soft tissue bioscaffolds that have come previously. It's certainly an advance on what's been seen previously. These differences help to account for the difference in clinical outcomes that we're seeing with Aroa ECM as well.
When we look across all of our products, whether it's in chronic wounds, in acute reconstructive procedures, in hernia repair, or in breast reconstruction, because all of these products are based on the Aroa ECM, we typically see this rapid formation of high-quality tissue that's well vascularized, appropriate to the site, and looks much more like normal tissue compared to what has been seen previously. That's really the basis of Aroa's competitive advantage in all of the indications that we're in. If you're curious about this, if you want more background, there's some really great material within this book chapter that outlines why Aroa ECM is different. Getting back to the outlook for the rest of the year, we are reiterating our guidance. We expect to be within revenue guidance, within normalized EBITDA guidance at the end of the year.
We're very pleased with how the business is tracking and feel confident both on the Aroa Direct side and also on the TELA Bio side. One thing I will draw your attention to is that we are holding an investor event in Sydney on the 25th of November to coincide with the release of our half-year results. At this event, we will do a deep dive into some key areas of Aroa's business and provide some substantial updates on these parts of the business. Particularly, Symphony will have more details on the reimbursement environment. We will share our commercial strategy and talk about progress with Enivo. It's made some great progress there, with much more clarity around our clinical plan.
We're planning to have a representative from TELA Bio join the event and talk about TELA Bio and the outlook for TELA Bio over the rest of the year and provide some comments on how the business is tracking. We'll also have a couple of other slightly more minor topics to talk about. We think this will be a really valuable event. We'll have some great opportunities to talk with executives in the company and potentially some clinicians as well. If you're interested, please save the date and we'd love to see you in Sydney for that event. Further details and registration information will be released to the ASX in early November. We'd love to see you there and think it'll be a very valuable event for everyone that attends. With that, I'd like to open it up for questions and answers.
Thank you, Brian. We'll move on now to Q&A. As I mentioned at the start, please use the raise hand function if you'd like to ask a question live, or you can just type them into the Q&A box. Let's take a look and see if we have any questions. We have got some questions coming through now. Given that we've had four quarters of positive cash flow, is there an expectation to continue with quarterly reporting?
Look, we will be continuing as we're required to by the ASX. For as long as that happens, obviously, if we've done four quarters in a row, then we may become exempt from having to do that. We'll go through the process with the ASX to determine what happens next. Certainly in terms of quarterly reporting, we will be doing our half years, so that'll happen every six months. We are thinking that in the middle of that, we will do a quarterly report. It'll be two half-year reports, a full-year report, and then two quarterly reports each year.
Right, okay. Just some comment on the growth for Myriad and how we're defining active accounts.
Yeah, look, what I can say about Myriad, and a lot of this information or more detail will be provided at the half year. This quarter was our best quarter in Myriad. It was up in excess of 30% on the previous corresponding quarter. If you look at Myriad on a run rate perspective, the current quarter, it sort of puts us at 27% growth on the current run rate, 27% growth on top of last year, sorry, last year's revenue. Obviously, our expectations are that Myriad revenue continues to step up quarter- by- quarter. In terms of activity in the sales force, we've actually kept our sales force, the sales force sales level in terms of number of employees has remained pretty constant. We continue to see increase, continual increase in the number of accounts, but more importantly, increased penetration into the existing accounts.
In short, we'll provide a more fulsome update at the half year.
Okay. If you could also comment on our U.S. sales in general and any plans around increasing sales staff.
Yeah, look, we, and I think we've said this for some time, we're very focused on improving productivity across the team so that we know that when we bring people on, they can break even quicker, get traction quicker. There's been a lot of effort on putting into how do we get our team more effective, more quickly, sales productivity. That's going well. We've recently developed a whole new training program for our people, and we're about to roll that out. I think our messaging is a lot sharper. I think we're much clearer about the value that we can bring to hospitals. We certainly have more clinical data as well. We think tuning that up and making sure that our people are up to speed with the training is super important.
From an adding headcount, this year we will add a small number of salespeople, but we're not, we won't have a massive increase in the sales team. Despite that, as James said, we will get a significant uplift in total sales. That's really what we're looking for. Going forward, we're going to step up the sales team over the next couple of years.
Right. Just following on from that, what do you, would you say is a key driver in the increase in Myriad sales?
Yeah, I think it's a few things. Clinical data for sure. I think understanding the value that we can bring to hospitals in terms of not just clinical outcomes, but what it means for the total cost of care for patients. I think that's super important. We're seeing that Myriad is very effective in our target procedures. Great success in trauma, very good success in lower limb salvage as well. They're the predominant procedures. We also see that Myriad is a very versatile and flexible product. It can work in a wide range of more minor procedures as well. We're not seeing Myriad be unsuccessful in the broad range of soft tissue reconstruction. I think that's something that's highly valued by hospitals and highly valued by surgeons, that flexibility and that versatility. I think that's something that we will capitalize on going forward.
Right. Now, Brett Rock is asking whether we have any progress on IDN deals to share.
Yeah, we don't. We are certainly in discussions with IDNs regarding Myriad particularly, but those are ongoing at the moment.
Great. Okay. Just turning to the environment in the U.S., we've got a question there on whether the tariffs are having any impact and similarly the U.S. government shutdown.
Yeah, I mean, I think the tariffs, you know, we've accounted for the tariffs. It's frustrating, but not, you know, hugely material in the business. For us, this year it may be AUD 1 million, AUD 1.5 million. It's important, but it doesn't undermine our business model. The shutdown, I think the one area where we may be impacted by the shutdown could be in the decisions around reimbursement changes for Symphony. There's a process that's being worked through in the U.S. government to finalize those changes, to bring those changes into place. We're not privy to their work program, but the announcement for finalization was due at the beginning of November. What we are hoping is that that's not delayed and that the implementation of those changes is also not delayed. At the moment, it's a little bit unsure whether that will or won't be the case.
Great. If you could also talk about the breakdown of geographical sales and the growth outlook for rest of world sales.
Yeah. Look, you know, each of the international markets that are continuing to grow is, you know, Canada is, you know, starting to make some really good traction there. Germany, again, is a key market. The U.K., I mean, South America, and then the Middle East as well. You know, also starting to get some first bit of traction in Australia, which is nice to know.
Okay. Do you think there are opportunities to coordinate our sales activities with TELA Bio just to generate some efficiencies?
Yeah, look, we obviously have ongoing dialogue with TELA Bio. I think there definitely are some areas where we can get more impact from what both the companies are doing independently by working closer together. I think we certainly look at why does the technology work so well. I think a much more consistency around our messaging on that, so that surgeons really understand why, how this technology works and why it works like it does. I think from a promotional perspective, yes, there are some, we're looking at some potential joint activities as well where we're having surgeons working in adjacent areas where we may be able to make more of that, and potentially at both the IDN and GPO level. I think there's a range of initiatives between both companies to see how do we get more impact than either company can do on their own.
Excellent. Okay. That's all the questions that we have for today. I think we can conclude the webinar. Thank you, everybody, for attending. Do you have any final comments to share, Brian?
Yeah, I mean, just kind of reiterating, fantastic first half to the year. Really pleased with how all parts of the business are tracking. Really positive about the outlook for the full year. We see some really good things coming together. We feel like we're, I've said this quite a bit, but we feel like we're only just getting started. There's a lot of opportunity in front of the company, and we're seeing a lot of things come together now to help build that momentum.
Excellent. Thank you for joining, everybody. We will conclude the webinar now.