AOTI Inc (AIM:AOTI) shares fell 20% after the wound care group warned of weaker growth for the rest of 2025, citing continued disruption from US government healthcare initiatives.
First-half revenue rose to at least $31 million, up 18% from a year earlier, but growth slowed sharply in the second quarter.
The company expects full-year revenue growth in the mid-teens percentage range, with adjusted EBITDA margin in the low double digits, as headwinds from cost-cutting at the US Department of Veterans Affairs and Medicaid persist.
Despite ongoing challenges in Arizona and broader sector volatility, AOTI secured a key Medicaid Provider ID for California, expanding access to the largest US Medicaid market.
Management highlighted a strong first quarter, robust cash position after a loan amendment, and reiterated confidence in the medium-term outlook, supported by the proven cost and clinical benefits of its TWO2 therapy.
In response to the warning, Peel Hunt has reduced its 2025 revenue forecast by 11% and EBITDA by 31%, to $7.5 million.
Its 2026 forecasts are also 11% lower for revenue and 34% lower for EBITDA.
The broker still sees strong long-term potential in AOTI but notes the business has been caught up in the major upheaval currently affecting the American healthcare sector.
"US government initiatives continue to bite, with a more significant impact from the ‘Big Beautiful Bill’ than previously expected," Peel told investors.
The shares fell 18.2p to 71.8p.