AVITA Medical Lifts Guidance as Record Quarter Brings Cash Flow Breakeven into View

AVITA Medical (ASX: AVH) has raised its 2026 net revenue guidance after record second-quarter revenue of US$21.7 million strengthened its expectation of reaching cash flow breakeven in the fourth quarter.

Revenue increased 18% from the prior-year period and 13% sequentially, with growth across RECELL, Cohealyx, PermeaDerm, and established international markets.

Full-year guidance now stands at US$86m to US$89m, up from US$80m to US$85m, representing projected growth of 20% to 24% from the US$71.6m generated in 2025.

Quarterly net cash use fell to about US$3.2m from US$9.9m in the first quarter, while cash, cash equivalents, and marketable securities totalled US$11.1m at 30 June.

AVITA retains access to an additional US$10m credit tranche if trailing 12-month net revenue reaches at least US$85m in any month before 31 March 2027, providing further financial flexibility during the expected transition to cash generation.

Increased Physician Confidence

RECELL remained the principal revenue contributor at US$18.5m, rising about 11% from the first quarter as physician confidence improved following reimbursement stabilisation and RECELL GO mini supported greater use in smaller wounds.

Total US RECELL volume increased 10.3% sequentially to 2,621 units, following growth of 1.5% in the first quarter, while 77% of RECELL GO mini cases during 2026 involved wounds of 500 square centimetres or less.

Cohealyx revenue rose about 16% to US$1.7m, supported by interim clinical data reported in April showing faster readiness for skin grafting than leading competing products.

PermeaDerm revenue increased about 40% to US$0.6m as clinicians adopted the product to temporarily stabilise and protect wounds before definitive closure, with data from the PermeaDerm I study expected in August.

International revenue grew about 26% to US$0.9m through established markets, adding a further source of sequential growth alongside the expanding US portfolio.

Margins and Cash Use Improve

Gross profit margin reached 81.9%, compared with 81.2% a year earlier and 81.7% in the first quarter, despite revenue-sharing arrangements across Cohealyx and PermeaDerm.

The RECELL-only gross margin was 86%, while operating expenses declined 6% from the prior-year period to US$24.6m as earlier cost optimisation and commercial restructuring measures continued to take effect.

The net loss narrowed to US$7.7m, or US$0.25 per share, from US$9.9m, or US$0.38 per share, a year earlier.

“As AVITA continues to expand utilisation in the US and build its presence in key international markets, our results reflect the strength of both our acute wound care portfolio and our commercial execution, led by RECELL and supported by Cohealyx and PermeaDerm,” chief executive officer Cary Vance said.

“These results demonstrate that AVITA has evolved into a business capable of sustained durable growth, giving us the confidence to raise our full-year revenue guidance and to announce our expectation of reaching cash flow breakeven in the fourth quarter.”

Reimbursement Proposal Adds Visibility

The Centers for Medicare & Medicaid Services (CMS) has proposed 2027 Medicare payment changes for RECELL that would establish nationally published physician reimbursement and increase hospital outpatient and ambulatory surgical centre facility payment rates.

The proposals reflect a new Category I Current Procedural Terminology (CPT) code family for Skin Cell Suspension Autograft procedures, due to take effect from 1 January 2027.

The CPT structure would combine harvesting, preparation, and application into a single family, standardise reporting in 100 square centimetre increments and remove distinctions between manual and automated preparation.

AVITA expects the framework to replace regionally determined physician pricing with a more transparent national valuation methodology, reducing variability for physicians and hospitals.

CMS is expected to issue final rules later this year, with implementation from 1 January 2027 if the proposals are adopted.