Summary of AVITA Medical FY Conference Call (December 04, 2025) Company Overview - **Company**: AVITA Medical (NasdaqCM:RCEL) - **Industry**: Therapeutic acute wound care - **Focus**: Acute wounds such as burns, gunshot wounds, and road rashes, aiming to expedite patient recovery and hospital discharge [2][3] Core Products - **RECELL**: First-in-class spray-on skin cell product approved by the FDA in 2019, used in burn centers and trauma centers across the U.S. [4] - **Cohelix**: Collagen-based dermal matrix, bioengineered in partnership with Regenity, which reduces gross margin but increases operating margin [6] - **PermeaDerm**: Biosynthetic dressing that allows visibility of the wound without removal, facilitating air exchange [6] Key Data and Performance Metrics - **RECELL Efficacy**: Patients using RECELL can be discharged 36% faster, with a study of 6,300 burn patients showing a six-day earlier discharge compared to traditional methods [4][17] - **Cost Discipline**: Achieved $10 million in annual cost reductions, maintaining SG&A costs for growth [5] - **Revenue Impact**: Estimated revenue loss of $10-$12 million due to reimbursement issues, with a focus on regaining momentum in 2026 [11][13] Market Potential - **Total Addressable Market (TAM)**: Estimated at $3.5 billion, with AVITA currently capturing about 5% of this market [17] - **Market Share**: Approximately 15%-20% market share in burn centers after five years of presence [17] Financial Performance - **Revenue**: Reported $17 million in revenue, down 13% year-over-year, primarily due to reimbursement challenges [19] - **Gross Margin**: RECELL products maintain a gross margin of 84%, though overall margins may decrease due to the mix of products sold [19][20] - **Cost Management**: Reduced expenses by 24% year-over-year, with a target of $23 million in expenses moving forward [20] Future Outlook - **2026 Guidance**: Anticipated revenue guidance to be provided in early January, with expectations of returning to a growth rate of 29% [20][21] - **International Expansion**: RECELL GO approved in the EU and UK, with pending approval in Australia, utilizing third-party distributors for market entry [15] Additional Insights - **Reimbursement Challenges**: Ongoing issues with CMS and MACs have impacted product usage and demand, but resolution efforts are underway [12][13] - **Patient-Centric Focus**: Emphasis on improving patient outcomes and reducing healthcare costs associated with prolonged hospital stays [16] This summary encapsulates the key points from the AVITA Medical FY Conference Call, highlighting the company's focus on acute wound care, product efficacy, market potential, financial performance, and future outlook.

Financial Data and Key Metrics Changes - For Q3 2025, the company reported approximately $17 million in revenue, a 13% decline from $19.5 million in the same period last year, primarily due to reimbursement disruptions [4][16] - The full-year revenue outlook has been revised to a range of $70 million-$74 million, down from the previous guidance of $76 million-$81 million [4][16] - Gross profit margin for the quarter was 81.3%, down from 83.7% in Q3 2024, driven by product mix changes [16][17] - Operating loss improved by 34% year-over-year, decreasing to $9.2 million from $13.8 million in the prior year [19] Business Line Data and Key Metrics Changes - The ReCell product line is expected to see renewed demand as reimbursement clarity improves, with significant progress made in provider reimbursement rates [5][10] - Cohelix and PermeaDerm are emerging as complementary growth drivers, with VAC submissions underway in about one-third of target accounts [12] Market Data and Key Metrics Changes - The total addressable market for AVITA's portfolio in U.S. burn and trauma hospitals is approximately $3.5 billion, with the company currently serving about 5% of this segment [9] - The company is focusing on the 200 burn centers and trauma hospitals that represent the most immediate and scalable growth potential [9] Company Strategy and Development Direction - The company is refining its commercial organization to align structure, territories, and accountability around high-value accounts [8] - Execution priorities for Q4 include rebuilding order momentum, driving consistent utilization of products, and enhancing forecast accuracy [10][11] - The company aims to ensure that its products become part of routine clinical practice, creating internal champions to help expand adoption [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that Q3 was a challenging quarter but emphasized that reimbursement stability and clinical validation are in place for future growth [14][15] - The company is focused on delivering consistent performance and restoring confidence among providers regarding reimbursement [14][23] - Management expressed optimism about the potential for growth in 2026, driven by improved operational execution and market conditions [39] Other Important Information - The company has secured a waiver of its Q3 revenue covenant under its Orbimed credit agreement and has amended the revenue covenant for Q4 [13][22] - Cash management has improved, with a reduction in operating cash use from $10.1 million in Q2 to $6.2 million in Q3 [21] Q&A Session Summary Question: Initiatives for Better Business Forecasting - Management discussed improving forecasting by understanding customer utilization and purchasing patterns, with confidence in better modeling moving forward [25] Question: Balancing Resources for New Market Launches - The primary focus remains on the U.S. market, with limited resources allocated to select international markets [26] Question: Recovery Timeline for ReCell Customer Base - Management indicated that educating accounts on reimbursement processes is crucial for rebuilding confidence, with expectations for recovery in early 2026 [28] Question: Update on VAC Approvals for Cohelix - About one-third of accounts are in the VAC process, with expectations for approvals to trend positively in Q4 [30] Question: Spending Outlook and Organizational Right-Sizing - Management expressed satisfaction with the current expense structure and indicated no further reductions are necessary, focusing on maintaining a disciplined approach [33][34] Question: Changes to Sales Team Incentive Structure - Management is reviewing sales compensation plans to ensure alignment with growth objectives, aiming for simplicity and fairness [35]

Financial Data and Key Metrics Changes - Commercial revenue for Q2 2025 was $18.4 million, a 21% increase year-over-year, but flat sequentially due to reimbursement issues [6][45] - Gross profit margin for Q2 was 81.2%, down from 86.1% in the same period of 2024, primarily due to product mix and higher inventory reserves [45][46] - Net loss for Q2 was $9.9 million, or $0.38 per share, showing a 36% improvement from a net loss of $15.4 million, or $0.60 per share, in Q2 2024 [48] Business Line Data and Key Metrics Changes - The ReCell system, particularly ReCell Go, contributed significantly to revenue growth despite headwinds [45] - New products Co Helix and PermaDerm also contributed to revenue, with Co Helix showing strong early adoption [45][46] - Operating expenses decreased to $26.1 million from $28.7 million in Q2 2024, driven by reductions in sales and marketing costs [47] Market Data and Key Metrics Changes - The company experienced a 20% reduction in demand for ReCell in the first half of 2025 due to claims processing issues [15] - Recent data from the US National Burn Registry indicated a 36% reduction in hospital stay for burn patients treated with ReCell, enhancing its market value proposition [9][18] Company Strategy and Development Direction - The company is focused on resolving reimbursement issues and expects a rebound in demand for ReCell in the second half of 2025 [16][54] - A new outcomes-based partnership agreement has been established to incentivize hospitals to adopt ReCell, potentially increasing revenue significantly [26] - The company is expanding its product portfolio with Co Helix and Permuderm, targeting trauma centers and enhancing its competitive position [35][37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the second half of 2025, citing strong early indicators of demand and successful interactions with Medicare contractors [51][54] - The company revised its full-year 2025 revenue guidance to $76 million to $81 million, down from a previous estimate of $100 million to $106 million, reflecting the impact of the first half challenges [50][52] - Management highlighted the importance of clinical data showing the benefits of ReCell, which strengthens hospital economics and patient outcomes [54] Other Important Information - The company secured a waiver for its revenue covenant and amended its credit agreement with OrbiMed, demonstrating confidence in its long-term strategy [49] - The company is preparing for the launch of ReCell GO Mini, designed for smaller trauma wounds, which is expected to enhance adoption in outpatient settings [31][76] Q&A Session Summary Question: Update on claims backlog resolution - Management indicated that there has been significant progress in resolving claims processing issues, with increased interactions between Medicare contractors and stakeholders since June [58][61] Question: Premium for ReCell compared to traditional methods - Management noted that ReCell utilization and payment are expected to be significantly higher than traditional methods, with a notable premium as wound size increases [64] Question: Co Helix VAC approvals - Management refrained from disclosing specific VAC approval numbers but indicated that over 25% of burn centers have VAC approvals pending, which is a positive sign for early product adoption [67][70] Question: Update on ReCell GO Mini rollout - Management reported that the ReCell GO Mini is performing well, particularly in level one and two trauma centers, and is gaining traction among trauma surgeons [75][78] Question: Cash balance and burn rate - Management confirmed that the minimum cash balance requirement of $10 million has not been waived, and they do not expect to fall below this threshold [84][85] Question: ATM status and share availability - Management confirmed that the ATM is still in place, with approximately 3.8 million shares available for sale [89]