AVITA Medical(RCEL) - 2024 Q4 - Annual Report

Revenue Growth - Total revenues increased by 28.1%, or $14.1 million, to $64.3 million for the year ended December 31, 2024, compared to $50.1 million in 2023[181]. - Commercial revenue was $64.0 million for the year ended December 31, 2024, an increase of 29% compared to $49.8 million in 2023, driven by deeper penetration within customer accounts[181]. - Total net revenues rose by 46%, or $15.7 million, to $50.1 million for the year ended December 31, 2023, driven by deeper penetration within customer accounts and the launch of full-thickness skin defects[192]. Profitability and Margins - Gross profit margin improved to 85.8% from 84.5% in the prior year, attributed to increased revenues and production volume[182]. - Gross profit margin increased by 2% to 84.5% compared to 82.4% in the previous year, attributed to higher production and lower shipping costs[193]. Operating Expenses - Total operating expenses rose by 29%, or $25.3 million, to $111.8 million compared to $86.4 million in 2023[184]. - Total operating expenses increased by 46%, or $27.3 million, to $86.4 million, compared to $59.1 million in the year ended December 31, 2022[195]. - Sales and marketing expenses surged by 56%, or $20.9 million, to $58.2 million, primarily due to increased salaries, commissions, and expansion of the sales force[185]. - Sales and marketing expenses surged by 70%, or $15.4 million, to $37.3 million, primarily due to higher salaries, benefits, and costs associated with the commercial launch of new products[196]. - General and administrative expenses increased by 17%, or $4.9 million, to $33.1 million, driven by higher salaries and stock-based compensation[186]. - Research and development expenses decreased by 2%, or $0.5 million, to $20.3 million, mainly due to lower professional fees offset by increased salaries[187]. - Research and development expenses rose by 50%, or $6.9 million, to $20.8 million, driven by higher clinical trial costs and the development of the next generation RECELL GO[198]. Net Loss - Net loss increased by $26.5 million to $61.8 million for the year ended December 31, 2023, compared to a net loss of $35.4 million in the previous year[190]. Cash and Debt - As of December 31, 2024, the company had approximately $14.1 million in cash and cash equivalents and $21.8 million in marketable securities[202]. - The company entered into a Credit Agreement on October 18, 2023, providing a five-year senior secured credit facility of up to $90 million, with $40 million borrowed on the closing date[203]. - Interest expense rose by approximately $4.2 million due to long-term debt related to the OrbiMed Credit Agreement, totaling $40.0 million[188]. - Net cash used in operations was $48.9 million for the year ended December 31, 2024, compared to $38.0 million in the previous year, primarily due to higher operating costs[207]. Product Approvals and Launches - The FDA approved RECELL GO mini, expected to launch in Q1 2025, targeting smaller wounds[179]. - Cohealyx received FDA 510(k) clearance, with full commercialization efforts planned for Q2 2025[178]. Revenue Recognition and Accounting - Revenue is primarily generated from the sale of RECELL EOU, RPK, and PermeaDerm products to hospitals and distributors[217]. - Revenue recognition for RECELL GO system is disaggregated between ASC 606 for RPK and ASC 842 for RPD[218]. - Most contracts have a single performance obligation, with revenue recognized when control of goods or services is obtained[222]. - The lease component (RPD) is accounted for under ASC 842, while the non-lease component (RPK) is accounted for under ASC 606[226]. - Assets in the lease program are depreciated over the useful life of the RPD device, which is 200 uses[227]. - Share-based compensation is measured on a graded-vesting method, with performance-based awards estimated at each reporting date[229]. - Long-term debt is accounted for using the fair value option, with changes in fair value reported in earnings[233]. - Deferred tax assets and liabilities are recognized for future tax consequences, measured using enacted tax rates[237]. - The company regularly reviews uncertain tax positions and recognizes tax benefits when more-likely-than-not that the position will be sustained[238]. - Recent accounting pronouncements are discussed in Note 2 of the Consolidated Financial Statements[240].