Advanced Medical Solutions Group (AIM:AMS) PLC shares tanked 33% after the company downgraded earnings estimates amid a lack of clarity over certain US royalty payments.
In an update, AMS said there were concerns around reimbursement for a diabetic foot ulcer treatment licensed to a company called Organogenesis.
Consequently, AMS has removed the Organogenesis royalty from its fourth-quarter guidance, anticipating a £2 million reduction in adjusted pre-tax profit for 2023.
This impact is expected to continue, reducing profits by £4 million annually until September 2026.
Additionally, the company will be hit harder than anticipated by the 'de-stocking' of its LiquiBand wound closure product in the US.
AMS is now forecasting revenues between £124-£127 million and an adjusted pre-tax profit of £25-£27 million for 2023. Future guidance, barring the Organogenesis royalty adjustment, remains unchanged.
At 8.54 am, the shares were changing hands for 167.8p, down 82.2p.