AVITA Medical Q2 2026 Earnings Call Transcript

On Thursday, AVITA Medical (NASDAQ: RCEL ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

Access the full call at Summary AVITA Medical, Inc. 7 million in Q2 2026, an 18% year-over-year increase, driven by the expanding use of its acute wound care portfolio, particularly RECELL. The company raised its full-year 2026 revenue guidance to $86-89 million, reflecting a 20-24% growth over 2025, and aims to achieve cash flow breakeven and start generating cash by Q4 2026. 9%, and operating expenses were stable, reflecting disciplined commercial execution and efficiency, with significant improvements in operating and net loss compared to the previous year.

S. and international markets, with increasing adoption of RECELL GO Mini, and the company is preparing for a transition to a new CPT code structure for simplified reimbursement. Cohelix and Permioderm are gaining traction, with the company supporting clinical adoption through ongoing studies and positioning these products as cost-effective alternatives in wound care. Full Transcript OPERATOR Good day, and thank you for standing by.

Welcome to the AVITA Medical, Inc. second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Ben Atkins, Vice President of Investor Relations and Corporate Communications. Ben Atkins, VP Investor Relations & Corporate Communications Please go ahead. Thank you, operator. Welcome to AVITA Medical's second quarter 2026 earnings call.

Joining me on today's call are Cary Vance, President and Chief Executive Officer, and David O'Toole, Chief Financial Officer. Today's earnings release and presentation are available on our website at under the Investor Relations section. Before we begin, I would like to remind you that this call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results to differ materially from any expectations expressed or implied by the forward-looking statements.

Please review our most recent filings with the SEC for comprehensive descriptions of the risk factors. Any forward-looking statements provided during this call are based on management's expectations as of today. I will now turn the call over to Cary. , and good morning in Australia.

Thank you for joining us. S. and build its presence in key international markets. Our results reflect the growing utility of our acute wound care portfolio led by RECELL and supported by Cohelix and Permioderm.

5 million in revenue during the second quarter, growing approximately 13% sequentially from the prior quarter. This growth reflected physician utilization following physician reimbursement stabilization together with increasing adoption of RECELL GO Mini, which continues expanding use in smaller wounds. I'll add a little more color on RECELL later in my remarks. Internationally, revenue from RECELL increased approximately 26% sequentially over the first quarter.

We continue to commercialize RECELL GO following regulatory authorizations in Europe, the UK, Australia, and New Zealand. As adoption builds, clinicians are also beginning to share their early clinical experience. During the quarter, the British Burn Association Annual Meeting featured the first UK clinical experience with RECELL GO, reporting successful treatment of 17 patients while highlighting improved operating room workflow. S.

opportunity. 7 million, representing approximately 16% sequential growth. We're encouraged by the steady progress we're seeing as hospitals complete their Value Analysis Committee, or VAC, reviews and begin incorporating Cohelix into clinical practice. We continue to maintain a healthy pipeline of approximately 55 active VAC reviews, with 10 to 15 reviews typically completed each quarter, driving a steady increase in ordering accounts.

The interim Cohelix-1 clinical data presented earlier this year supports those dynamics by providing hospitals and surgeons with comparative clinical evidence. The study demonstrated substantially faster time to skin graft readiness compared with leading dermal matrices, and later this year we expect to submit the complete 6-month follow-up data set for publication, providing additional evidence of long-term durability. Permioderm generated $600,000 in revenue during the quarter. Commercial adoption remains in its early stages.

We're encouraged by the initial response following our recent positioning of Permioderm as a wound temporizer, providing clinicians with an alternative to allograft to temporarily stabilize and protect the wound before definitive closure. To further support that positioning, we expect results from our PERMIODERM-1 clinical study later this year. As a reminder, this post-market study evaluated Permioderm as a clinically comparable, lower-cost alternative to allograft. Today, 25 hospitals have experience using all three AVITA products.

Some are already regularly incorporating the full portfolio into clinical practice, while others are still evaluating where each product best fits within their treatment pathway. That's what we'd expect at this stage of adoption of our new products, and it gives us confidence in the opportunity to grow utilization of our full portfolio within our accounts. Since becoming CEO last October, my objective has been straightforward: to build a business that consistently delivers growth quarter over quarter, year over year, through disciplined commercial execution. Looking back over the first half of 2026, I believe we've demonstrated that objective in action.

We've delivered consecutive quarters of sequential growth, broadened adoption across our portfolio, and we continue to improve the financial profile of the company. That progress gives us greater confidence in where the business is headed, and today we're updating our outlook accordingly. First, we're raising our full-year 2026 revenue guidance to a range of $86 million to $89 million, representing growth of 20% to 24% over 2025. Second, we're introducing new guidance to achieve cash flow breakeven and begin generating cash during the fourth quarter of 2026.

Reaching that milestone is an important step in AVITA's evolution. It reflects not only stronger revenue growth, but also the operating discipline and cash generation that David will discuss in more detail. David O'Toole, Chief Financial Officer Thank you, Cary. Good afternoon, and in Australia, good morning.

I will use my prepared remarks to look at how our strong commercial performance is flowing through the business, particularly across operating leverage, cash generation, and our path to cash flow breakeven. Turning to the financials on slide 4, let me start with revenue. 7 million, crossing over $20 million in revenue for a quarter for the first time in our company history. With this sequential revenue growth for the second quarter and $41 million in revenue for the first six months of 2026, we are increasing our revenue guidance for 2026 from $80 million to $85 million to now $86 million to $89 million.

6 million in revenue in 2025 in a range of approximately 20% to 24%. 2% in the prior-year quarter and remained above 81% year to date despite continued growth in our newer products. As we've discussed previously, while changes in product mix modestly impact reported gross margin percentage, Cohelix and Permioderm contribute incremental gross profit without a proportional increase in operating expenses. RECELL gross margin remains strong at approximately 86%.

RECELL growth provides a tailwind for reported gross margin that offsets the impact of product mix as Cohelix and Permioderm become a larger part of the business. 6 million, essentially no change to the first quarter and approximately 6% lower than in the same period in 2025. Importantly, this demonstrates the benefit of the commercial operating structure we established during the second quarter of 2025, capable of supporting continued commercial growth without requiring a corresponding increase in operating expenses.

Looking ahead for the rest of 2026, we continue to identify opportunities to further reduce operating expenses while continuing to support our commercial priorities. 9 million respectively in the same period last year. The second quarter operating and net loss showed significant improvements from the quarterly losses we have generated in the past. Turning to cash, which remains one of our highest priorities.

As we discussed during our first quarter call, we expected cash use to improve significantly during the second quarter as seasonal payments normalized, collections improved, and revenue continued to scale. That's exactly what happened. 2 million during the quarter, representing a major improvement from the first quarter and from the quarterly cash burn each quarter last year. 1 million in cash, cash equivalents, and marketable securities.

As I look at the trajectory of our numbers, indicated in the green boxes on this slide, I see a financial model performing as expected and in alignment with our growing revenue. As Cary mentioned earlier, we are also introducing new guidance for our cash flow outlook. That confidence of reaching cash flow breakeven is supported by three financial trends that are now working together, illustrated here on slide 5. First, revenue continues to scale.

7% and 13% respectively, and we've raised our full-year revenue guidance. Second, we've maintained high gross margin above 81% while growing our portfolio over multiple quarters. Third, we've maintained disciplined control of operating expenses and optimized our cash conversion cycle. Essentially, we are spending less money to run the business and collecting cash faster from our operations.

Taken together, those trends give us increasing confidence that AVITA is approaching an important financial inflection point. As the business continues to scale, we expect a further reduction in cash use during the third quarter before achieving cash flow breakeven and beginning to generate cash during the fourth quarter of 2026. Turning to slide 6, our updated outlook reinforces our confidence that the balance sheet remains aligned with the next phase of the company's growth and funded through this transition to cash generation.

We continue to operate well within the requirements of our credit facility, which was intentionally structured to support the business through this stage of commercial expansion. As revenue continues to build, the Perceptive debt facility also provides access to an additional $10 million tranche once trailing 12-month revenue reaches $85 million, providing additional financial flexibility as we transition towards cash generation. In summary, we're delivering commercial growth, maintaining strong gross margin, exercising control of operating expenses, and significantly reducing our use of cash.

Together, those trends support our confidence in the increased revenue forecast we shared today and our path towards cash generation. Today's results also reflect strong execution across the organization. Commercial, operations, and corporate teams have worked together exceptionally well to scale the business while maintaining financial discipline. I'd like to thank everyone across AVITA for their commitment and execution during the first half of the year.

With that, I'll hand the call back to Cary. Cary Vance, President & CEO Thanks, David. Before we open the line for questions, I'd like to spend a few minutes on RECELL. It's the foundation of our business, and we continue to see encouraging progress in both physician utilization and the reimbursement framework that will support future growth.

Following the transition of reimbursement across all seven Medicare Administrative Contractors, or MACs, physician utilization of RECELL continued to strengthen during the second quarter. S. RECELL volume increased more than 10% sequentially this quarter to over 2,600 units. We're also seeing a growth driver emerge through RECELL GO Mini.

As you can see on the right-hand side of the slide, 77% of RECELL GO Mini procedures year to date were performed in wounds of 500 square centimeters or less. That's exactly what we designed RECELL GO Mini to do: to expand RECELL into smaller burn and trauma wounds. We also view the increased volume in the second quarter as an encouraging indicator of the underlying physician demand for RECELL when reimbursement is stable and predictable. To that end, we are now entering the final stages of the transition to new Category 1 CPT codes for Skin Cell Suspension Autograft, or SCSA—the procedure term for RECELL.

As a reminder, beginning January 1, 2027, the new Category 1 CPT code family for SCSA will replace today's multi-code structure. The current eight-code structure separates harvest, preparation, and application. This will be replaced by a simplified four-code family based on anatomic location and wound size. In July, within its proposed 2027 Medicare payment updates, the Centers for Medicare & Medicaid Services, or CMS, proposed nationally published physician relative value units, or RVUs, for the new SCSA codes.

We expect CMS to finalize the rule later this year. If adopted as proposed from this coming January, physician reimbursement would transition from today's regional MAC contractor price methodology to a nationally published RVU framework, improving transparency and consistency for providers over time. We expect this to simplify reimbursement discussions, allowing our commercial team and customers to focus less on coding complexity and more on clinical adoption and patient care. As I step back and look at the quarter, I'm incredibly encouraged by what we're seeing in our numbers.

RECELL utilization is growing. Cohelix, and behind it, Permioderm are gaining traction. Revenue continues to grow quarter after quarter, and we have a clear path to cash flow breakeven by year end. Those aren't isolated achievements.

They're evidence that the business is operating the way we intended it to. As we look to the remainder of 2026, we'll continue executing with the same discipline that has brought us to this point. Our priorities are clear: continue expanding RECELL utilization; continue growing adoption of Cohelix and Permioderm; and continue executing with commercial and financial discipline. As we continue to do those things effectively, we believe AVITA is well positioned to create long-term value for shareholders while helping more patients benefit from our technologies.

Thank you for joining us today and for your continued support. Operator, we're now happy to take questions. OPERATOR As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Please stand by while we compile the Q&A roster. Our first question comes from Frank Takinen with Lake Street Capital Markets. Your line is open. Frank Takinen, Analyst at Lake Street Capital Markets Great.

Thank you for taking the questions, and congratulations on a really solid quarter. I was hoping to ask two questions. I'll ask them both up front and then hop back in queue. To start on guidance, maybe walk through the key pieces behind the guidance increase.

Heard the comments about RECELL GO Mini doing well and recovery—maybe kind of parsing out which contributed more. And then secondly, as you think about reimbursement in 2027, how much of a challenge has the previous structure been, meaning maybe what portion of cases or adoption by site has been hung up because of the previous structure, and maybe what do those new economics do to Cary Vance, President & CEO Thanks, Frank. Thanks for joining today. First of all, regarding guidance, it's fairly straightforward and simple.

We're on a growth trajectory, and when we set guidance at the beginning of the year, there were some things that we knew and some things that we didn't. We set some pretty responsible guidance based on the trajectory we thought we would follow, and we're on a higher trajectory.