Aroa Biosurgery (ASX: ARX): Why This Newly Profitable Medtech Looks Like a Buy at Current Levels

Aroa Biosurgery adds new trauma study as profits turn positive

Aroa Biosurgery (ASX: ARX) shares have seen increased activity this week, hovering around the A$0.70 level following news that the company announced another major clinical milestone. Results from its MASTRR study have been published in the Journal of Trauma and Injury, marking the 116th peer-reviewed publication supporting its wound healing technology. For investors, this matters because clinical evidence drives hospital adoption, and Aroa Biosurgery is building an almost unassailable body of proof that its products work.

The study evaluated 49 patients with 61 soft tissue defects across four Level One trauma centres in the United States. These are the highest-acuity hospitals handling life-threatening cases. Results showed Myriad achieved successful tissue coverage after just a single application, with zero infections or complications. In our view, this real-world validation from elite surgical settings is exactly what procurement committees need before expanding orders.

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Myriad Delivers Clinical and Economic Value for Hospitals

What makes this study compelling is the cost angle. Hospitals face relentless pressure to justify spending, and Myriad appears to deliver both better outcomes and lower total costs. Surgeons achieved positive results with one application rather than multiple interventions, translating directly to savings on operating room time and patient recovery.

CEO Brian Ward highlighted that over 140,000 trauma procedures occur annually in the US, representing a US$450 million addressable market. With Myriad less than 5% penetrated in target markets, the growth runway looks substantial. This is the third MASTRR publication, with over 450 patients enrolled, suggesting more validating data is coming.

We believe this consistent clinical evidence separates Aroa Biosurgery from early-stage medtech companies that struggle to prove their products work outside controlled settings.

Financial Turnaround Removes Key Investment Risk

The clinical progress arrives alongside a genuine financial transformation. Aroa reported its first profitable half-year, swinging from a NZ$1.5 million EBITDA loss to a NZ$1.8 million profit. Operating cash flow improved by NZ$8.9 million to reach NZ$4.0 million positive, marking four consecutive quarters in the black. This trajectory suggests the turnaround is structural.

Myriad drives this momentum, with revenue jumping 33% to NZ$19.7 million. It now represents 44% of total product sales, up from 38% in the prior corresponding period. With 85% gross margins, every additional dollar drops heavily to the bottom line. The balance sheet adds comfort: NZ$23.4 million cash with zero debt provides a runway without needing dilutive capital raises. This combination of profitability, growth, and balance sheet strength is rare in small-cap healthcare.

The Investor’s Takeaway for Aroa Biosurgery

At A$0.72, Aroa Biosurgery trades below the analyst consensus target of A$0.85, representing 18% upside. Four analysts maintain a Strong Buy rating.

The bull case centres on a newly profitable company with validated technology and a clear expansion runway. The complex wound market represents US$730 million, potentially reaching US$1.8 billion with expansion into diabetic foot ulcers.

However, risks remain. US market execution is critical. The company partly depends on its TELA Bio distribution partnership, which has faced challenges meeting guidance. Competition from larger players could intensify, and US healthcare reimbursement dynamics always carry uncertainty.

For growth investors comfortable with healthcare exposure, we believe Aroa’s de-risked profile makes this an attractive entry point. If Myriad continues growing above 25% annually while cash flow stays positive, the current valuation looks reasonable for the opportunity ahead.