AOTI Inc shares slid on Monday after it reported revenue growth for 2025 but said it is halting the treatment of new Arizona Medicaid patients amid a reimbursement dispute.
The California-based wound healing-focused medical technology company said it has intensified its efforts with the Arizona state Medicaid agency to secure a positive resolution to ongoing reimbursement issues.
It said Medicaid payments continued to be denied by insurers, leading to an increase in receivables. Some claims were submitted through the arbitration process, and all $1.1 million of these have been paid in full.
However, the firm said this is an ‘intensive and laborious process’.
‘To limit further exposure until we achieve a resolution, while minimising the impact to existing patients, the company has no alternative but to cease treating new Arizona Medicaid patients from 1 April 2026,’ it said.
Shares in AOTI sank 18% to 30.50 pence on Monday morning in London.
The firm said it expects to report 2025 revenue and the adjusted earnings before interest, tax, depreciation and amortisation margin in line with consensus expectations.
Revenue rose 14% to $66.5 million in 2025 from $58.4 million.
The consensus market expectations are for revenue of $66.1 million with an adjusted Ebitda margin of 10.8%.
Net debt of $6.5 million was better than the consensus of $11.2 million, swung from net cash of $900,000 in 2024. It said the rise was due to the drawdown from the SWK Funding LLC loan facility, as receivables increased.
AOTI expects Arizona Medicaid to have contributed around $9.2 million of revenue in 2025. Revenue growth excluding Arizona for the year was 15%.
‘As the situation remains fluid, any resolution reached between now and the finalisation of the 2025 accounts may result in adjustments, positive or negative, to the unaudited results in this statement,’ AOTI noted.
‘We enter 2026 with a stronger core business and capabilities that exceed any point in our history. Despite the major challenges presented by US policy initiatives in 2025, we have proactively managed this risk through the restructuring of our commercial teams and implementing key metrics to better drive performance in all targeted market segments,’ said Chief Executive Officer Mike Griffiths.
‘The business delivered growth ahead of our peers and made meaningful operational progress for the year, and as headwinds in the US healthcare market begin to abate, AOTI is well positioned to benefit. We continue to expect a [Centers for Medicare & Medicaid Services] local coverage determination in the near term, which we believe has the potential to be transformational for the company.’
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