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DATE

Thursday, Aug. 6, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • Vice President of Investor Relations and Corporate Communications - Ben Atkins
  • President and Chief Executive Officer - Cary G. Vance
  • Chief Financial Officer - David O'Toole

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TAKEAWAYS

  • Total Revenue -- $21.7 million, representing 18% growth year over year and 13% growth sequentially.
  • RECELL Revenue -- $18.5 million, representing 11% growth compared to the first quarter of 2026.
  • Cohealyx Revenue -- $1.7 million, representing 16% growth compared to the first quarter of 2026.
  • PermeaDerm Revenue -- $600,000, representing 40% growth compared to the first quarter of 2026.
  • International Revenue -- $900,000, representing 26% sequential growth from the prior quarter.
  • Gross Margin -- 81.9%, an increase of 70 basis points year over year reflecting the growth of RECELL.
  • RECELL Gross Margin -- 86.0%, providing a tailwind to the overall margin as the product continues to scale.
  • Operating Expenses -- $24.6 million, a decrease of 6% year over year reflecting continued execution of cost optimization initiatives.
  • Net Loss -- $7.7 million, or $0.25 per share, improved from a net loss of $9.9 million in the prior-year period.
  • Revenue Guidance -- $86 million to $89 million for the full year 2026, representing projected growth of 20% to 24% over 2025.
  • Cash Flow Breakeven -- Fourth quarter of 2026, marking a target milestone in the company's financial transition.
  • Net Cash Use -- $3.2 million, a reduction from $9.9 million in the first quarter of 2026 as seasonal payments normalized.
  • Cash and Marketable Securities -- $11.1 million as of June 30, 2026.
  • RECELL Volume -- 2,600 units in the United States, representing a 10% sequential increase.
  • Sales and Marketing Expenses -- $13.6 million, a reduction of $700,000 compared to the prior-year quarter.
  • General and Administrative Expenses -- $6.0 million, a reduction of $700,000 year over year.
  • VAC Reviews -- 55 active reviews for Cohealyx, with 10 to 15 reviews typically completed each quarter.
  • RECELL GO Mini Usage -- 77% of procedures year to date performed in wounds measuring 500 cm2 or less.
  • Additional Credit Tranche -- $10 million available from Perceptive if trailing 12-month revenue reaches $85 million.
  • Product Adoption -- 25 hospitals currently utilizing the entire three-product portfolio of RECELL, Cohealyx, and PermeaDerm.
  • Weighted Average Common Shares -- 30.7 million, compared to 26.4 million in the second quarter of 2025.

SUMMARY

Management of AVITA Medical, Inc. (RCEL -1.35%) reported quarterly revenue exceeding $20 million for the first time and updated full-year guidance to reflect a higher growth trajectory. The company reported a reduction in net cash use and expects to achieve cash flow breakeven during the fourth quarter of 2026. Strategic progress included the proposal of national Medicare physician payment rates for the skin cell suspension autograft procedure and the expansion of the product portfolio with Cohealyx and PermeaDerm.

  • CEO Vance noted, "Beginning January 1, 2027, the new Category I CPT code family for SCSA replace today's multicode structure."
  • CFO O'Toole stated, "we are spending less money to run the business, and collecting cash faster from our operations."
  • Management expected to submit the complete six-month follow-up data set for the Cohealyx-I clinical study for publication by the end of 2026.
  • The company increased the number of hospitals utilizing its entire three-product portfolio to 25 accounts.
  • CMS proposed nationally published physician relative value units for skin cell suspension autograft codes to improve transparency and predictability for providers.
  • Management attributed the growth in RECELL volume to the stabilization of physician reimbursement across regional Medicare administrative contractors.
  • The British Burn Association annual meeting highlighted the first clinical experience with RECELL GO in the United Kingdom, involving the treatment of 17 patients.

INDUSTRY GLOSSARY

  • Allograft: Tissue harvested from a donor for use in skin replacement or wound management.
  • CPT (Current Procedural Terminology): Standardized codes used to report medical procedures to insurers for reimbursement.
  • Cohealyx: A collagen-based dermal matrix used for wound treatment.
  • MAC (Medicare Administrative Contractor): A private health care insurer that processes Medicare claims for a specific geographic jurisdiction.
  • PermeaDerm: A biosynthetic wound matrix used as a temporizer before definitive closure.
  • RVU (Relative Value Unit): A measure used by Medicare to determine physician payment levels based on procedure complexity and resources.
  • RECELL: An autologous cell harvesting device used to prepare and deliver a skin cell suspension at the point of care.
  • RECELL GO Mini: A line extension of the RECELL system designed to treat smaller wounds up to 480 cm2.
  • SCSA (Skin Cell Suspension Autograft): The medical procedure term for the application of RECELL technology.
  • VAC (Value Analysis Committee): A hospital committee that reviews new products and technologies for clinical and economic suitability.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the AVITA Medical, Inc. Second quarter 26 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 1-1 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. Please go ahead.

Ben Atkins: Thank you, operator. Welcome to AVITA Medical's second quarter 26 earnings call. Joining me on today's call are Carrie 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 www.avitamedical.com 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 2000. 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 expectations as of today. I will now turn the call over to Carrie.

Cary G. Vance: Good afternoon in the US, and good morning in Australia. Thank you for joining us. As you saw in our press release today, we delivered strong revenue growth in the second quarter of $21.7 million, up 18% year over year and 13% sequentially. As AVITA continues to expand in the US, 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 Cohealyx and PermeaDerm. In the US, ReCell generated $8.5 million in revenue during the second quarter. Growing 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 will add a little more color on ReCell later in my remarks. Internationally, revenue from RECELL increased 26% sequentially over the first quarter. 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. While international revenue remains a smaller contributor today, these milestones continue building the foundation for long term growth alongside our large U.S. opportunity.

Cohealyx generated $1.7 million, representing 16% sequential growth. We are encouraged by the steady progress we are seeing as hospitals complete their value analysis committee or VAC reviews and begin incorporating Cohealyx into clinical practice. We continue to maintain a healthy pipeline of 55 active VAC reviews with 10 to 15 reviews typically completed each quarter. Driving a steady increase in ordering accounts. The interim Cohealyx-I clinical data presented earlier this year supports those dynamics by providing hospitals and surgeons with comparative clinical evidence. The study demonstrated substantial 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. PermeaDerm generated $600 thousand in revenue during the quarter. Commercial adoption remains in its early stages. We are encouraged by the initial response following our recent positioning of PermeaDerm 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 PermeaDerm-I clinical study later this year. As a reminder, this post market study evaluated PermeaDerm as a clinically comparable lower cost alternative to Allograft. Today, 25 hospitals have experience using all 3 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 is what we would 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 26, I believe we have that objective in action. We have 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 are updating our outlook accordingly. First, we are 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 are introducing new guidance to achieve cash flow breakeven and begin generating cash during the fourth quarter of 26. 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: Thank you, Carrie. 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. As Carrie indicated, revenue increased 18% year over year and 13% sequentially from the first quarter. To $21.7 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 6 months of 2026 we are increasing our revenue guidance for 2026 from $80 million to $85 million to now $86 million to $89 million This will represent growth for this year from the $71.6 million in revenue in 2025 in a range of approximately 20% to 24%. Turning to gross margin. Gross margin increased to 81.9% compared to 81.2% in the prior year quarter, and remained above 81% year-to-date despite continued growth in our newer products. As we have discussed previously, while changes in product mix modestly impact reported gross margin percentage, Cohealyx at 86%.

RECELL growth provides a tailwind for reported gross margin that offsets the impact of product mix as Cohealyx and PermeaDerm become a larger part of the business. Now looking at operating expenses. Operating expenses were $24.6 million, essentially no change to the first quarter, and 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.

This quarter, operating loss and net loss improved to $6.9 million and $7.7 million, respectively. Compared to $11.1 million and $9.9 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 1 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 is exactly what happened. Net cash use improved to approximately $3.2 million during the quarter.

Representing a major improvement from the first quarter and from the quarterly cash burn each quarter last year. We ended the quarter with $11.1 million in cash equivalent and market securities. As I look at the trajectory of our numbers, as indicated in the green boxes on this slide, I see a financial model performing as expected, and in alignment with our growing revenue. As Carrie mentioned earlier, we are also introducing new guidance for our cash flow outlook. That confidence of reaching cash flow breakeven is supported by 3 financial trends. that are now working together, as illustrated here on slide 5. First, revenue continues to scale.

We have now delivered 2 consecutive quarters of meaningful sequential growth of 9.7% and 13%, respectively. And we have raised our full year revenue guidance. Second, we have maintained high gross margin above 81%. While growing our portfolio over multiple quarters. Third, we have 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 used during the third quarter before achieving cash flow breakeven and beginning to generate cash during the fourth quarter of 26. 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 are 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 share 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 would like to thank everyone across AVITA for their commitment and execution during the first half of the year. With that, I will hand the call back to Carrie.

Cary G. Vance: Thanks, David. Before we open the line for questions, I would like to spend a few minutes on RECELL. it is 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 7 Medicare administrative contractors, or MACs, physician utilization of RECELL continued to strengthen during the second quarter. Total U. S. RECELL volume increased more than 10% sequentially this quarter to over 2.6 thousand units. We are 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 cm² or less. that is 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 I CPT codes for skin cell suspension autograft, or SCSA, the procedure term for RECELL.

As a reminder, beginning January 1, 2027, the new Category I CPT code family for SCSA replace today's multicode structure. The current 8-code structure separates harvest, preparation, and application. This will be replaced by a simplified 4-code family based on anatomic location and wound size. In July, within its proposed 2027 Medicare payment updates, the Centers for Medicare and 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 predictability 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 am incredibly encouraged by what we are seeing in our numbers. RECELL utilization is growing, Cohealyx and, behind it, PermeaDerm are gaining traction. Revenue continues to grow quarter after quarter. And we have a clear path to cash flow breakeven by year-end. Those are not isolated achievements. They are evidence that the business is operating the way we intended it to.

As we look to the remainder of 2026, we will 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 Cohealyx and PermeaDerm. 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 are now happy to e questions.

Operator: As a reminder, to ask a question, please press 1-1 on your telephone, and wait for your name to be announced. Our first question comes from Frank Takkinen Lake Street Capital Markets. Your line is open.

Frank Takkinen: Great. Thank you for ing the questions, and congratulations on a really solid quarter. I was hoping to ask 2 questions. I will ask them both upfront and then hop back in queue. To start on guidance, maybe walk through the key pieces behind the guidance increase. I 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 are those new economics do to that? Thank you.

Cary G. Vance: Thanks, Frank. Thanks for joining today. First of all, regarding guidance, it is fairly straightforward and simple. We are on a growth trajectory, and we said guidance at the beginning of the year. There were some things that we knew and some things that we did not. We set some pretty responsible guidance based on the trajectory we thought we would follow, and we are on a higher trajectory. And so that is very clear to us now. I think we have eyes on the rest of the year. All of our customers, we have become very predictable in our forecast and so we feel it is appropriate to raise it at this time.

To something that we believe we will achieve. And then second, from a reimbursement standpoint, if you just e the numbers part aside, the biggest problem last year was confusion. And the amount of time that it took from our salespeople and our customers to try and get a handle on if they were going to get paid, what they were going to get paid, and when. And so we have resolved that as kind of a placeholder because that is what it was meant to be. Through the MACs over time by account, And so what this will do is it will simplify the codes it will also make it absolute nationwide.

And so as I said in my prepared remarks, it will move us from these clarifying more complex discussions with our customers to focus more on the clinical and economic benefits of the products. And so that will be very helpful to the efficiency and effectiveness of our sales team and I think our upe on RECELL. Which is still very underpenetrated in the market. Thank you.

Operator: Our next question comes from Ryan Zimmerman with U. S. Bancorp. BTIG. Your line is open.

Ryan Zimmerman: Hi. This is Jacqueline on for Ryan. Thank you for ing the questions. I was just wondering with the proposed 2027 PFS, is there any risk of a transitional air pocket as providers move from the 8 legacy codes to the 4 new standardized codes? And what is the internal plan to get ahead of that educationally?

Cary G. Vance: Sure. So we have already begun communication with our teams who have started to communicate with our customers. So that is already starting. Even though all of that will be finalized and late October, early November, that proposed change is likely. And because of it, we are starting to educate them already as to how this will change. And some of the associations that we are a part of are also educating their members a lot of burn surgeons about the change as well. And so it is kind of a full scale effort to make sure that everybody understands it very clearly by the time it hits January 1.

Ryan Zimmerman: Thank you. And then with the Cohealyx-I full dataset previously expected in the end of 2026. Favorable interim data already reported in April showing faster time to skin grafting readiness versus the leading competitive products. Can you confirm that the full data set timeline is still on track? And what incremental information will it add to further support VAC approvals and broader adoption.

Cary G. Vance: So we are still on track in terms of that timeline. The further data is just that there is follow-up data that is included as well, will be part of that submission and publication. Thank you.

Operator: Our next question comes from Joshua Jennings with TD Cowen. Your line is open.

Joshua Jennings: Hi, good afternoon. Thanks for ing the question and congrats on a great quarter. This is John on for Joshua. I just wanted to ask you quickly on adoption across all 3 products, specifically what you are hearing from your sales reps in the field. What feedback are they giving you at the physician level in terms of doctors using all 3 products? And how does this influence your pricing across your product portfolio? And just had a quick follow-up.

Cary G. Vance: Well, I think the feedback from a clinical perspective is very strong. I believe that each of the products stand on their own, and the physicians have told us that. Terms of their clinical effectiveness, but also the economic benefit that they see. it is still early days in them trying to figure out how 2 or 3 of these products, PermeaDerm, Cohealyx, and RECELL, how they--how 1 plus 1 equals 5 or 6 in terms of synergies. But we are working together with them to make sure that is maximized. But very positive, Some of our best customers are adopting all 3 technologies, and we expect that to continue going forward.

Joshua Jennings: Okay. Excellent. And then just in terms of pricing across the 3 individual units, certainly appreciate that RECELL is accretive at the gross margin line. Do not get me wrong, 85% to 86% gross margins are excellent at a product level. Is there anything you can do to keep improving that gross margin to potentially offset some of the dilution from Cohealyx and PermeaDerm?

Cary G. Vance: Sure. So our operational team continues to look for efficiencies. On the back end of our business, so we will continue to look for those as well as our opportunity to maximize price in the marketplace. That will be something that we will continue to hold and try to expand going forward as we should. In terms of the other products, Cohealyx and PermeaDerm, again, early days. I am trying to gain market penetration. We are always looking at price to make sure we are optimized there. So we will continue to do that. Excellent.

Joshua Jennings: Thank you, John.

Cary G. Vance: Thank you.

Operator: I am showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.