AVITA Medical, Inc. Q3 FY2025 earnings call

• Reimbursement progress: All 7 regional Medicare Administrative Contractors (MACs) have published or confirmed provider reimbursement rates for RECELL, bringing clarity and renewed demand.
• RECELL adoption: A leading burn center incorporated RECELL into its treatment protocol; RECELL GO received CE Mark approval in Europe, with the first patient treated in Germany.
• Commercial focus: Refined commercial organization, focusing on the U.S. market where 90% of revenue comes from ~200 burn centers and trauma hospitals, serving 5% of a $1.3 billion targeted segment.
• Execution priorities: Rebuild order momentum, drive consistent utilization of products, complete commercial transition, and enhance forecasting.
• Complementary products: Cohealyx has VAC submissions in 1/3 of target accounts; PermeaDerm performs well as a biosynthetic dressing.
• Financial discipline: Operating expenses reduced by 24% year-over-year, cash position improved with $23.3 million in cash at quarter end.

In the third quarter, commercial revenue was $17.1 million, a 13% year-over-year decline. The RECELL franchise had a gross margin of 83.6%. Cohealyx and PermeaDerm contribute to revenue but affect product mix. Full year 2025 revenue is revised to a range of $70 million to $74 million, down from prior guidance of $76 million to $81 million.

• Full year 2025 revenue revised to $70M-$74M from prior $76M-$81M due to reimbursement normalization timing and RECELL demand return.
• Expect utilization of RECELL to normalize progressively in coming quarters.
• 2026 financial guidance to be updated in early Q1 2026.

• Reimbursement disruption earlier in the year caused uncertainty for providers regarding RECELL procedure claims payment.
• Hospital Value Analysis Committee (VAC) reviews and commercial organization transition impacted near-term results.

Q: Can you spend more time on initiatives to better forecast the business?

A: It gets down to the rep and customer level understanding product utilization and purchase cadence, with improved processes and leadership to enhance forecasting.

Q: How to balance resources between U.S. focus and European launch?

A: Primary focus is the U.S., with limited resources in Europe to select distributors and gain traction, but U.S. growth is the priority.

Q: How are accounts expected to regain confidence in reimbursement?

A: Educating accounts on codes, ensuring they use the product and see reimbursement, with a lag but efforts to get them up to speed.

Q: Update on VAC approvals for Cohealyx?

A: ~1/3 of accounts in VAC, ~2/3 scheduled to exit in Q4, with teams working to truncate time between approval and ordering.

Q: Spending outlook and incentive structure for sales team?

A: Expense structure is disciplined, no more major cuts; sales compensation plans will be aligned with growth, not yet changed significantly.