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AVITA Medical, Inc. (RCEL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 commercial revenue was $18.5M, up 67% year over year, with gross margin 84.7%; net loss improved to $13.9M (-$0.53 per share) versus -$18.7M (-$0.73) in Q1 2024 .
  • Versus Street, revenue missed consensus by ~$2.17M and EPS missed by ~$0.19; management reaffirmed FY25 revenue guidance of $100–$106M, FCF in H2, and GAAP profitability in Q4 2025. The misses were driven by product mix (Cohealyx/PermeaDerm revenue share), volume discounts, and inventory reserve, partially offset by opex actions (>$2.5M/qtr reduction) . Revenue/EPS consensus values marked with an asterisk and sourced from S&P Global.*
  • Strategic catalysts: full commercial launch of Cohealyx (Apr 1), RECELL GO mini rollout (Feb), PermeaDerm manufacturing insourced and revenue-share improved (60% to AVITA), plus proposed CMS NTAP for RECELL (potential Oct 1) .
  • Liquidity and covenants: cash and marketable securities declined to $25.8M (from $35.9M at FY-end). AVITA obtained a waiver of the Q1 TTM revenue covenant ($73M) and reset future covenant levels, keeping FY25 guidance unchanged .

What Went Well and What Went Wrong

What Went Well

  • Portfolio expansion and adoption: “We are no longer a single product burn-only company… fully integrated multiproduct platform” with RECELL GO mini and Cohealyx launched; addressable market expanded to >$3.5B .
  • Opex discipline and path to profitability: management expects opex reductions of ~$2.5M per quarter and reiterated FCF in H2 and GAAP profitability in Q4 2025 .
  • Clinical/operational validation: early Cohealyx cases showed 7-day graft readiness and reduced length of stay; PermeaDerm manufacturing moved in-house; distribution terms improved (AVITA now retains 60% of ASP) .

What Went Wrong

  • Consensus miss: Q1 revenue ($18.5M) below consensus ($20.7M*) and EPS (-$0.53) below consensus (-$0.32*), reflecting product mix shifts, volume discounts, and inventory reserves; overall gross margin fell to 84.7% vs 86.4% prior-year . Revenue/EPS consensus values marked with an asterisk and sourced from S&P Global.*
  • Cash usage was higher than anticipated in Q1 due to bonuses/commissions and payroll resets; cash & marketable securities decreased by ~$10.1M q/q to $25.8M .
  • Vitiligo commercialization paused amid reimbursement uncertainty; management guided to no revenue dependence from vitiligo near term .

Financial Results

Quarterly Performance vs Prior Periods and Consensus

MetricQ3 2024 (oldest)Q4 2024Q1 2025 (newest)
Commercial Revenue ($USD Millions)$19.5 $18.4 $18.5
Gross Margin %83.7% 87.6% 84.7%
Total Operating Expenses ($USD Millions)$30.2 $26.1 $27.5
Net Loss ($USD Millions)$(16.2) $(11.6) $(13.9)
Diluted EPS ($)$(0.62) $(0.44) $(0.53)
Cash & Marketable Securities ($USD Millions)$44.4 $35.9 $25.8

Q1 2025 vs Q1 2024 (YoY)

MetricQ1 2024Q1 2025
Commercial Revenue ($USD Millions)$11.1 $18.5
Gross Margin %86.4% 84.7%
Net Loss ($USD Millions)$(18.7) $(13.9)
Diluted EPS ($)$(0.73) $(0.53)

Q1 2025 Actual vs Wall Street Consensus (S&P Global)

MetricConsensusActualSurprise
Revenue ($USD)$20,668,598*$18,514,000 -$2,154,598 (miss)*
EPS ($)-$0.321*-$0.515 -$0.194 (miss)*

Values retrieved from S&P Global.*

Segment/Breakdown

  • Reported mix commentary (not numerical): Cohealyx (50% ASP share) and PermeaDerm (60% ASP share) reduce overall gross margin %, while RECELL-only gross margin remained ~86.4% in Q1 2025 .

KPIs and Operating Metrics

KPIQ3 2024Q4 2024Q1 2025
RECELL-only Gross Margin %—85–87% expected forward 86.4% in Q1
Opex Reduction Run-rate ($USD Millions/qtr)—Baseline opex $26.1 ~$2.5 reduction expected per quarter
TTM Revenue Covenant ($USD Millions)Removed for Q4’24 Reset schedule announced Waived $73.0; next $78.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Commercial RevenueFY 2025$100–$106M (Feb 13 press release) $100–$106M (reaffirmed May 8) Maintained
Free Cash FlowFY 2025Generate FCF in H2 2025 Generate FCF in H2 2025 Maintained
GAAP ProfitabilityFY 2025Q4 2025 Q4 2025 Maintained
Gross Margin (RECELL-only)Ongoing85–87% expected forward 86.4% in Q1; expect to remain in this range Maintained
Overall Gross MarginFY 2025Expected small decrease due to mix Continued small degradation as Cohealyx/PermeaDerm scale Maintained (mix effect)
Operating ExpensesFY 2025Q4’24 opex as baseline ($26.1M/qtr) Reduce opex by ~$2.5M per quarter run-rate Lowered
EU CE Mark (RECELL GO)Mid-2025 targetMid-2025 expected Mid-2025 expected (prepared to meet demand) Maintained
CMS NTAP (RECELL)Potential start—Proposed NTAP; potential effective Oct 1 (pending) New potential tailwind

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Portfolio Expansion (RECELL GO, Mini, Cohealyx, PermeaDerm)RECELL GO transition; Cohealyx pre-approval plan; Mini targeted launch early 2025 Cohealyx FDA clearance and Mini approval in Dec; launch plans for Q1/Q2 RECELL GO mini launched Feb; Cohealyx full launch Apr 1; PermeaDerm manufacturing insourced and rev-share improved Accelerating adoption and integration
Sales Force ModelExpansion and leadership progress Baseline opex and no headcount growth planned Shift to selling-oriented model; regions consolidated; headcount reduced; incentives realigned Efficiency-focused, multi-product selling
Reimbursement—EU CE mark mid-2025 expected CMS proposed NTAP for RECELL; optimistic engagement Building reimbursement support
Gross Margin MixTemporary decline due to engineering/validation RECELL ~85–87%; overall GM to dip with distribution products Overall GM 84.7%; RECELL-only 86.4%; mix (50% Cohealyx, 60% PermeaDerm ASP share) Mix-driven GM headwind
Tariffs/Macro——Current tariff slate not material Neutral
VitiligoPublications submitted; 2025 payer activity; minimal 2025 revenue Health economics emphasized; minimal near-term revenue Pause spending; no revenue dependence until defined plan Deprioritized
International ExpansionCE mark delay, expecting Q1 2025 Mid-2025 CE mark expected; modest int’l revenue Prepared to meet demand upon CE mark Nearing approval window

Management Commentary

  • “We are no longer a single product burn-only company… fully integrated multiproduct platform positioned to lead in therapeutic acute wound care… U.S. addressable market… more than $3.5 billion annually.” — CEO Jim Corbett .
  • “Overall, we expect to save $2.5 million per quarter in operating expenses and improve operating margin, all while increasing our selling capacity.” — CEO Jim Corbett .
  • “Gross margin for RECELL products only was 86.4% for the quarter… overall gross margin percentage will decrease… as the percentage of our revenue derived from new products increases.” — CFO David O’Toole .
  • “We reiterate our full year 2025 commercial revenue guidance of $100 million to $106 million… expect to generate free cash flow in the second half… achieve GAAP profitability during Q4.” — CFO David O’Toole .

Q&A Highlights

  • Cohealyx rollout: limited Q1 release validated 7-day graft readiness; full SKU set available since Apr 1; post-market Cohealyx I enrolling to provide outcomes and cost-effectiveness data .
  • RECELL GO mini adoption: early inventory placement at trauma accounts; sized for <480 cm² wounds (~2.5% TBSA); multi-product portfolio improves trauma surgeon engagement .
  • Sales coverage: reconfigured to ~70 selling roles with market development specialists; aim to be present in both stages of the two-stage procedure to sell dermal matrix, RECELL and PermeaDerm .
  • Revenue cadence: management models “even sequential growth” with some back-half weighting as VAC approvals for Cohealyx ramp .
  • Vitiligo: spending paused; continue discussions with payers but no revenue dependence in forecasts until a reimbursement path is defined .

Estimates Context

  • Q1 2025 revenue missed consensus ($20.67M*) by ~$2.15M; EPS missed consensus (-$0.321*) by ~$0.194, driven by lower overall gross margin from mix (Cohealyx/PermeaDerm revenue share), volume discounts, and higher inventory reserve . Values retrieved from S&P Global.*
  • With FY25 revenue guidance reaffirmed ($100–$106M) and the opex run-rate reduction (~$2.5M/qtr), Street models may need to rebalance quarterly cadence to reflect sequential growth with greater back-half weighting (VAC-driven Cohealyx contributions) .

Key Takeaways for Investors

  • Near-term setup: Despite Q1 misses vs consensus, portfolio breadth (RECELL GO mini, Cohealyx, PermeaDerm) plus opex cuts and proposed NTAP support a back-half inflection; FY25 guidance maintained .
  • Margin dynamics: Expect RECELL-only GM to remain mid-80s while overall GM stays lower on mix; operating margin should benefit as distribution revenues scale without proportional opex increases .
  • Cash/covenants: Liquidity declined in Q1, but covenant relief secured; monitor cash burn trajectory and execution of opex reductions into H2 .
  • Adoption catalysts: Cohealyx consignment/RFID, clinical data read-through (Cohealyx I), and RECELL GO mini address trauma use-cases (<480 cm²), supporting sequential growth .
  • Reimbursement optionality: CMS NTAP (if approved) could enhance RECELL economics from Oct 1; EU CE mark for RECELL GO expected mid-2025 .
  • Execution watchpoints: Sales model transition and VAC throughput are critical to ramp non-RECELL revenues; management indicated potential breakout of non-RECELL sales by Q3, implying meaningful mix shift .
  • Medium-term thesis: Integrated acute wound care platform increases ASP per case and TAM (> $3.5B U.S.); if AVITA delivers on adoption and efficiency plan, pathway to sustained profitability strengthens .

Values retrieved from S&P Global.*