Aroa rides on the sheep’s back with maiden profit in FY25

New-Zealand-based soft-tissue repair company Aroa Biosurgery is looking in good shape after delivering its first full-year profit since listing on the ASX in 2020.

Aroa is heading in the right direction, surging to profitability in FY25. Pic via Getty Images

Special Report: New-Zealand-based soft-tissue repair company Aroa Biosurgery is in fine fettle after the company surged into the black in FY25, delivering its first profit since listing on the ASX in 2020. 

• Aroa surges to profitability in FY25 with a NZ$4.2 million normalised EBITDA profit 
• Reports total revenue for full year of NZ$84.7 million, up 23% and exceeding guidance
• Provides total revenue guidance for FY26 of NZ$92-100 million, up 10-20% on FY25

Aroa Biosurgery (ASX:ARX) reported normalised EBITDA profit of NZ$4.2 million for FY25 – a sharp turnaround from the NZ$3.1m loss recorded in FY24.

Total revenue for FY25 of NZ$84.7m was an increase of 23% on the previous year and exceeded guidance of NZ$81-84m.

The company’s reported product revenue for the year of NZ$84m is an increase of 24% on the previous year, with its Myriad product family continuing to do the heavy lifting. 

Direct sales accounted for 53% of the product revenue mix with Myriad – which can be used in a wide range of surgical procedures where tissue needs to be rebuilt – expected to continue to become a larger part of overall sales mix.

Aroa’s full-year product gross margin increased slightly to 86%, attributed to the high margin Myriad products making up a larger proportion of the sales mix.

Source: Aroa Biosurgery

Normalised operating expenses and EBITDA

Aroa’s reported selling and administrative expenses were NZ$64.9m in FY25, a 10% increase from NZ$59m in FY24. 

The company said the increase primarily reflected full-year impact of salaries and operating costs associated with additional US sales staff hired in FY24, as well as higher commission payments to the US sales team.

It also includes ongoing investment in clinical development, including the Myriad Augmented Soft Tissue Reconstruction Registry (MASTRR) registry. 

Aroa’s R&D expenses were NZ$9.6m in FY25, up from NZ$9.1m in FY24. 

The company said expenses covered product line extensions for its Myriad and Ovitex portfolios, and continued investment in the Enivo technology, identified as having a total addressable market of more than US$1 billion.

Aroa continues to build evidence demonstrating the efficacy and cost benefits associated with its extracellular matrix (ECM) technology to drive sales growth over the medium term.

Cash outflows fall in FY25

On a full-year basis, Aroa’s net cash outflows from operating activities were NZ$2.6m, compared to outflows of NZ$7.4m in FY24. 

The company achieved positive net cash inflows from operations of NZ$2.3m in H2 FY25, which it said reflected strong normalised EBITDA profit achieved during the period.

Cash outflows from investing activities were NZ$3.7m, compared to outflows of NZ$6.9m in FY24. 

Aroa said majority of the FY25 spend of NZ$1.8m was investment into additional manufacturing capacity. 

Capitalised development costs decreased from NZ$2.8m in FY24, to NZ$1.1m in FY25.

Aroa achieved positive total cash flow for H2 FY25,  ending FY25 with a cash balance of NZ$22m, compared to NZ$29.5m at the end of FY24 and remains debt-free.

Myriad to continue driving growth in FY26

Aroa has provided FY26 total revenue guidance of NZ$92-100m, which is 10 to 20% growth on FY25 on a constant currency basis. 

Growth in Myriad sales of more than 25%, and continued investment in sales productivity is expected to increase revenue in FY26.  

Sales to Aroa’s Nasdaq-listed US partner TELA Bio are “conservatively estimated to grow at a more moderate pace”.  

The company said normalised EBITDA of NZ$5-8m, representing 19-90% growth on FY25, “reflects restrained clinical expenses and investment in new product development”.

‘FY25 marks a significant financial milestone’

Founded in 2008 by veterinarian, CEO and managing director Dr Brian Ward, Aroa’s soft-tissue repair products are derived from ovine forestomach matrix (sheep rumen) sourced exclusively from New Zealand. 

The matrix is processed and sterilised to remove DNA and cells, leaving a tissue scaffold called the ECM for new tissue to grow, which contains a dense network of vascular channels – a structure like human skin – and over 150 proteins critical to healing.

“FY25 marks a significant financial milestone – our first year of normalised EBITDA profitability since listing,” Ward said. 

“Looking ahead, we are increasingly confident about our ability to deliver strong top-line growth and enhanced profitability in FY26 and beyond. 

“Myriad clearly demonstrates that we are delivering on our vision to unlock regenerative healing for everybody.”

This article was developed in collaboration with Aroa Biosurgery, a Stockhead advertiser at the time of publishing. 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.