Avita Medical Inc. (RCEL) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.Since a ...

Company Overview - AVITA Medical is currently undergoing a leadership transition with Cary Vance serving as Interim CEO and David O'Toole as CFO [2][3] - The company is focused on improving its business predictability and credibility following a challenging period in 2025 [3] Business Goals - The primary objective for the fourth quarter was to gain a better understanding of the business to enable accurate forecasting, which was successfully achieved [4] - Looking ahead to 2026, the company aims to grow in a disciplined and methodical manner [4]

AVITA Medical (NasdaqCM:RCEL) Update / briefing February 18, 2026 05:00 PM ET Company ParticipantsBen Atkins - VP of Investor Relations and Corporate CommunicationsCary Vance - Interim CEODavid O'Toole - CFOCary VanceUnderstanding, trying to understand our business, wanting to become more, predictable, forecastable, credible, to, to understand how we might remove some of the noise and distraction as well around our, our covenants. And, the goal over the fourth quarter was not only to start, understanding ou ...

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As we said last quarter, predictable reimbursement not only for our products, but also for the clinicians who use them, is what allows our strong clinical and real-world health economic data to translate into routine standard use of ReCell. With that clarity in place, we are now seeing early signs of utilization beginning to normalize as accounts reengage. Ultimately, growth in this business is driven less by adding new hospital accounts and more by increasing adoption, utilization, and repeated use of our ...

Financial Data and Key Metrics Changes - The company reported fourth quarter revenue of $17.6 million and full-year revenue of approximately $71.6 million, representing about 11% growth over 2024 [5][11] - Full-year gross margin was 82.1%, down from 85.8% in 2024, due to inventory reserves and product mix changes [12] - Fourth quarter gross margin was 81.2%, compared to 87.6% for the same period last year [13] Business Line Data and Key Metrics Changes - The focus for 2025 was on resolving reimbursement uncertainty for the RECELL product, with six of the seven Medicare Administrative Contractors publishing payment rates for RECELL procedures [6] - Approximately 90% of revenue comes from about 200 burn and trauma centers, with a shift towards organic monthly usage patterns rather than bulk ordering [6][7] Market Data and Key Metrics Changes - The company is taking a disciplined distributor-led approach to expand its footprint in select international markets, focusing on establishing familiarity and operational readiness [9] - Initial clinical use of RECELL GO in European markets has begun, with a focus on responding to urgent needs in the burn community [9] Company Strategy and Development Direction - The strategy is centered around a single integrated platform consisting of RECELL, Cohealyx, and PermeaDerm, aimed at increasing adoption and utilization among clinicians [7] - The company expects full-year revenue for 2026 to be between $80 million and $85 million, reflecting growth of approximately 12% to 19% over 2025 [10] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of establishing a disciplined operating model and improving visibility into cash use, which are expected to support consistent execution in 2026 [4][10] - The company aims to maintain disciplined control of operating costs while supporting revenue growth with a stable and scalable cost structure [17] Other Important Information - The company refinanced its debt through a new credit facility, which is designed to reduce covenant risk and support execution rather than constrain it [16] - The fourth quarter marked the third consecutive quarter of improvement in net cash use, declining from $10.1 million in Q2 to $5.1 million in Q4 [15] Q&A Session Summary Question: Guidance on revenue covenants and growth pace - Management clarified that the $15.4 million revenue covenant is not a guidance figure and indicated that they expect growth to be progressive from Q4 to Q1 and throughout the year [20][25] Question: Reimbursement dynamics affecting 2025 - Management confirmed that they are engaged with all seven MACs and are optimistic about the seventh MAC publishing payment rates soon, with no concerns about disruptions [30][31] Question: Customer experience with Cohealyx and PermeaDerm - Management discussed the process of working with champions in accounts to facilitate the adoption of Cohealyx and PermeaDerm, noting early positive experiences [37][38] Question: Drivers of growth for 2026 guidance - Management indicated that growth will be driven by increased utilization within existing accounts and contributions from all three product lines, including RECELL, Cohealyx, and PermeaDerm [49]

Financial Data and Key Metrics Changes - The company reported fourth quarter revenue of $17.6 million and full-year revenue of approximately $71.6 million, representing about 11% growth over 2024 [5][11] - Full year gross margin was 82.1%, down from 85.8% in 2024, reflecting inventory reserves and product mix changes [12] - Fourth quarter gross margin was 81.2%, compared to 87.6% for the same period last year [13] Business Line Data and Key Metrics Changes - Approximately 90% of revenue comes from about 200 burn and trauma centers, with a focus on increasing adoption and utilization of products like RECELL, Cohealyx, and PermeaDerm [6][7] - The Cohealyx I post-market study is fully enrolled, and the PermeaDerm I study is nearing full enrollment, with data expected later in 2026 [8] Market Data and Key Metrics Changes - Six of the seven Medicare administrative contractors have published payment rates for RECELL procedures, which is expected to restore confidence among clinicians [6] - The company is taking a disciplined distributor-led approach in select international markets, focusing on establishing operational readiness [9] Company Strategy and Development Direction - The company aims to drive disciplined execution, refine commercial focus, and position for growth in 2026, with a strategy centered around an integrated platform of products [4][10] - The company expects full year revenue of $80 million to $85 million in 2026, representing growth of approximately 12% to 19% over 2025 [10] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of predictable reimbursement for products and the need for increased adoption and utilization by clinicians [6][18] - The company is focused on maintaining disciplined control of operating costs and supporting revenue growth with a stable cost structure [17] Other Important Information - The company refinanced its debt through a new credit facility, which provides more flexibility and reduces covenant risk [15][16] - The fourth quarter marked the third consecutive quarter of improvement in net cash use, declining from $10.1 million in Q2 to $5.1 million in Q4 [15] Q&A Session Summary Question: Guidance on revenue covenants and growth pace - Management clarified that the $15.4 million covenant is not a guidance figure and that they expect growth to continue from Q4 into Q1 and throughout the year [20][21] Question: Reimbursement dynamics affecting 2025 - Management confirmed engagement with all seven MACs and expressed optimism about the seventh MAC publishing payment rates soon [30][31] Question: Customer experience with Cohealyx and PermeaDerm - Management discussed the process of working with champions in accounts to facilitate the adoption of Cohealyx and PermeaDerm, noting early positive experiences [37][38] Question: Drivers of growth for 2026 guidance - Management indicated that growth will come from increased utilization within existing accounts and contributions from Cohealyx and PermeaDerm [49]

Financial Data and Key Metrics Changes - The company reported fourth quarter revenue of $17.6 million and full-year revenue of approximately $71.6 million, representing about 11% growth over 2024 [5][12] - Full year gross margin was 82.1%, down from 85.8% in 2024, reflecting inventory reserves and product mix changes [12] - Fourth quarter gross margin was 81.2%, compared to 87.6% for the same period last year [13] - Total operating expenses in the fourth quarter were $24.7 million, down 5% year-over-year, primarily due to lower sales and marketing expenses [14] Business Line Data and Key Metrics Changes - The company focused on increasing adoption and utilization of its products, with approximately 90% of revenue coming from about 200 burn and trauma centers [6][8] - The Cohealyx I post-market study is fully enrolled, and the PermeaDerm I study is nearing full enrollment, with data expected later in 2026 [9] Market Data and Key Metrics Changes - Six of the seven Medicare administrative contractors have published payment rates for RECELL procedures, which has begun to restore confidence for clinicians [6] - The company is taking a disciplined distributor-led approach to build its footprint in select international markets [10] Company Strategy and Development Direction - The company aims to drive disciplined execution, refine commercial focus, and position itself for growth in 2026 [4] - The strategy is built around a single integrated platform of RECELL, Cohealyx, and PermeaDerm, used repeatedly by the same clinicians [8] - The company expects full year revenue of $80 million-$85 million in 2026, representing growth of approximately 12%-19% over 2025 [11] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of predictable reimbursement for products and clinicians to drive routine use of RECELL [6] - The company is focused on establishing the right operating cadence and executing fundamentals well to ensure consistent progress [8] - Management expressed confidence in the normalization of RECELL utilization and the expansion of portfolio use within core accounts [11] Other Important Information - The company refinanced its debt through a new credit facility, which provides more flexibility and reduces covenant risk [15][16] - The fourth quarter marked the third consecutive quarter of improvement in net cash use, declining to $5.1 million [15] Q&A Session Summary Question: Guidance on revenue growth pace - Management clarified that the $15.4 million revenue covenant is not a guidance figure and that they expect progressive growth from Q4 to Q1 and throughout the year [22][26] Question: Reimbursement dynamics affecting 2025 - Management confirmed that they are engaged with all seven MACs and are hopeful for the seventh MAC to publish payment rates soon [30][31] Question: Customer experience with Cohealyx and PermeaDerm - Management indicated that champions in accounts are helping to push Cohealyx and PermeaDerm through the VAC process, with early signs of uptake [37][38] Question: Drivers of growth for 2026 guidance - Management expects growth from all three product lines, primarily driven by increased utilization within existing accounts [48]

Financial Performance - Total revenues increased by 11%, or $7.4 million, to $71.6 million for the year ended December 31, 2025, compared to $64.3 million in 2024[197] - Total revenues increased by 28%, or $14.1 million, to $64.3 million for the year ended December 31, 2024, compared to $50.1 million in the prior year[205] - Net loss decreased by $13.3 million to $48.6 million, compared to a net loss of $61.8 million in the previous year[204] Gross Profit and Margins - Gross profit margin was 82.1%, down from 85.8% in the prior year, primarily due to product mix and higher inventory reserve[198] - Gross profit increased by 30%, or $12.8 million, to $55.2 million, resulting in a gross profit margin of 85.8%[205][206] Operating Expenses - Total operating expenses decreased by 9%, or $10.4 million, to $101.4 million compared to $111.8 million in 2024[199] - Sales and marketing expenses decreased by 9%, or $5.1 million, to $53.1 million, attributed to reductions in salaries, stock-based compensation, and travel expenses[200] - General and administrative expenses decreased by 18%, or $5.8 million, to $27.3 million, primarily due to lower stock-based compensation and salaries[201] - Total operating expenses increased by 29%, or $25.3 million, to $111.8 million, compared to $86.4 million in the prior year[208] - Sales and marketing expenses rose by 56%, or $20.9 million, to $58.2 million, driven by increased personnel costs and expansion of the sales force[209] - General and administrative expenses increased by 17%, or $4.9 million, to $33.1 million, primarily due to headcount growth and stock-based compensation[210] - Research and development expenses increased by 2%, or $0.5 million, to $20.8 million, driven by higher salaries and stock-based compensation[202] - Research and development expenses decreased by 2%, or $0.5 million, to $20.3 million, mainly due to lower professional fees[211] Cash Flow and Financing - The company had approximately $10.2 million in cash and cash equivalents and $7.9 million in marketable securities as of December 31, 2025[215] - For the year ended December 31, 2025, net cash used in operating activities was $31.2 million, a decrease from $48.9 million in 2024, primarily due to higher gross profit and lower operating costs[229] - Net cash provided by investing activities decreased to $12.5 million in 2025 from $37.4 million in 2024, attributed to lower cash inflows from maturities of marketable securities and reduced capital expenditures[230] - Net cash provided by financing activities increased significantly to $14.9 million in 2025 from $3.5 million in 2024, driven by net proceeds from a Placement[231] - The company closed a five-year credit facility providing up to $60 million in capital, with initial TTM revenue covenants set at $68.5 million for Q1 2026[186] - A new credit agreement was entered into on January 13, 2026, providing a senior secured credit facility of up to $60 million[217] Regulatory Approvals and Product Development - The Centers for Medicare & Medicaid Services approved a New Technology Add-On Payment for the RECELL® System, allowing up to $4,875 in additional reimbursement per case[189] - RECELL GO mini was approved by the FDA in December 2024, designed for treating smaller wounds up to 480 cm², enhancing the RECELL GO platform[180] - The company aims to increase market penetration in U.S. burn centers and expand adoption of RECELL for traumatic and surgical wounds[182] Tax and Accounting - Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts and their respective tax bases[261] - The company regularly reviews its uncertain tax positions, recognizing tax benefits when it is more-likely-than-not that the position will be sustained[262] - The revenue recognition for the RECELL GO product is disaggregated between ASC 606 for RPKs and ASC 842 for RPD[239] - The company has elected the fair value option for accounting under ASC 825-10 for its loan facility, allowing for remeasurement every reporting period[257] - The fair value of the loan facility was determined using a Monte Carlo simulation, capturing different potential cash flow outcomes[258] Shareholder and Dividend Policy - The company has no plans to commence the payment of dividends, with no dividends paid for the year ended December 31, 2025[233] - The company has never paid cash dividends and does not expect to pay any in the foreseeable future[258] Miscellaneous - The company accrued $2.0 million related to 510(k) clearance received on December 19, 2024, with an additional obligation of up to $3.0 million contingent on clinical study results[234] - The company aims to maintain a capital structure that ensures the lowest cost of capital available, regularly reviewing opportunities to improve outcomes for stakeholders[232] - The trailing 12-month revenue covenant for the fourth quarter of 2024 was removed, which was previously set at $67.5 million[228] - The company issued warrants to purchase up to 145,180 shares of common stock at an exercise price of $0.01 per share as part of the Fourth Amendment to the Previous Credit Agreement[227] - The company has no material off-balance sheet arrangements that could affect its financial condition or results of operations[235] - The fair value of warrants is recorded as a liability and subject to re-measurement at each settlement date[256] - The company uses the Black-Scholes option pricing model to estimate the fair value of warrant liabilities[256] - The expected term of stock options is determined using the "simplified" method due to limited historical exercise experience[258] - The company has limited historical option exercise experience due to its short operating history, with the first plan established in 2016[258] - As a smaller reporting company, the company is not required to provide detailed market risk disclosures[265]

Fourth Quarter and Full Year 2025 Financial and Business Update February 12, 2026 Forward-Looking Statements & Legal Disclaimers This presentation and the accompanying oral commentary may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are predictions and subject to significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Forward-looking statements may be identifie ...