AOTI (AIM:AOTI), the AIM-listed medical technology group focused on wound healing and amputation prevention, said the Centers for Medicare & Medicaid Services (CMS) has issued a proposed Local Coverage Determination (LCD) backing topical oxygen therapy for diabetic foot ulcers that fail to heal after four weeks of optimised care.
The proposal covers the whole of the US and now enters a 45-day public comment period, with CMS expected to finalise the LCD within a year.
A final LCD would give AOTI access to roughly 69 million Medicare enrollees, a population with a diabetes prevalence rate as high as 32% and a diabetic foot ulcer rate of roughly 13%.
AOTI already holds a 75% share of the topical oxygen therapy segment with its intermittent TWO2 therapy, the only such product on the market, and its existing commercial footprint spans 26 states covering about 86% of the US population.
The company points to a near-term serviceable market of roughly $400 million where payer coverage already exists through the VA and New York Medicaid, against current penetration in the low-to-mid teens, with the broader addressable market expanding to as much as $26 billion as CMS and wider coverage follows.
"Once the LCD is finalised, the resulting mandated Medicare coverage will be transformative for AOTI, significantly expanding access to our therapy for US seniors", said Dr. Mike Griffiths, chief executive officer.
AOTI will publish its half-year trading update on 27 July.
News Intelligence what this means for the company
CMS has proposed national Medicare coverage for AOTI's topical oxygen therapy in diabetic foot ulcers, unlocking access to 69 million enrollees after a 45-day comment period and final determination within a year. AOTI already holds 75% of the topical oxygen therapy market with TWO2, its only competitor-free product, and operates across 26 US states covering 86% of the population; Medicare approval would extend coverage from its current low-to-mid teens penetration into a near-term serviceable market of ~$400 million (where VA and New York Medicaid already pay) and a broader $26 billion addressable market.
Regulatory de-risking of a monopoly product in a large, underserved patient population materially strengthens AOTI's growth trajectory, contingent on CMS finalising the LCD within the stated year and reimbursement rates supporting the company's market assumptions.
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