AOTI (LSE:AOTI), a specialist in advanced wound care technologies, could be set for a significant expansion in the United States after the Centers for Medicare & Medicaid Services (CMS) proposed nationwide coverage for topical oxygen therapy in the treatment of diabetic foot ulcers. The decision relates to patients whose wounds have not healed after four weeks of optimised care and, if finalised, would make Medicare reimbursement available for the company’s proprietary TWO2 therapy.
Proposed CMS decision could expand reimbursement opportunities
According to AOTI, the proposed coverage determination would substantially increase access to its TWO2 topical oxygen therapy across the U.S. healthcare system. The company believes the policy would not only support Medicare reimbursement but also encourage broader adoption by Medicaid programmes and commercial insurers.
Management expects the expanded reimbursement framework to significantly increase the addressable market for its wound care platform while leveraging its existing commercial infrastructure, allowing the business to pursue growth without requiring substantial additional investment.
Market leadership supports long-term growth ambitions
AOTI estimates it currently accounts for approximately 75% of the topical oxygen therapy market. The company says TWO2 is the only intermittent topical oxygen wound therapy available and highlights its differentiated clinical performance, citing improved long-term healing outcomes compared with continuous oxygen therapies and other advanced wound care treatments.
Existing reimbursement through healthcare providers including the U.S. Veterans Affairs system and New York Medicaid already represents a revenue opportunity of around US$400 million over the near to medium term. With nationwide CMS coverage and broader payer adoption, AOTI believes its long-term serviceable addressable market could expand to approximately US$26 billion.
Financial outlook balanced by profitability challenges
While AOTI continues to deliver strong revenue growth and improving margins, its financial outlook remains constrained by ongoing losses and limited cash flow sustainability. Technical indicators remain broadly supportive, although recent momentum suggests the shares may be approaching stretched levels. Valuation also continues to be weighed down by negative earnings and the absence of a dividend.
About AOTI, Inc.
AOTI, Inc. is a medical technology company founded in 2006 with operations in Oceanside, California, and Galway, Ireland. The group develops non-invasive treatments for severe and chronic wounds, with its patented Topical Wound Oxygen (TWO2) therapy approved for use in the United States, Europe, the United Kingdom, Canada, China, Australia and Saudi Arabia. Designed for home treatment, the therapy has demonstrated positive clinical outcomes in reducing diabetic foot ulcer recurrence, hospital admissions and amputations.
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