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AVITA Medical, Inc. (RCEL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $17.1M, down 13% YoY; EPS was -$0.46. Both missed Wall Street consensus: revenue $18.32M and EPS -$0.30; guidance cut to $70–$74M from $76–$81M. Stock reaction was negative post print per call summaries. Bold miss vs estimates reflects reimbursement headwinds and product mix *.
  • Gross margin of 81.3% vs 83.7% YoY; operating expenses fell 24% to $23.0M; net loss improved to -$13.2M vs -$16.2M YoY. Cash/marketable securities ended at $23.3M with net cash use improving to $6.2M from $10.1M in Q2 .
  • Reimbursement clarity largely restored: all seven MACs have published/confirmed payment rates under new Category I CPT codes, expected to normalize RECELL volumes. CE Mark for RECELL GO enables European commercialization and CMS NTAP expands use in non-burn acute wounds .
  • Debt covenant amended: Q4 2025 TTM revenue covenant reset to $70M; Q3 covenant waiver received. Company added $0.5M PIK to principal; evaluating capital options with 2026 guidance update in early Q1 2026 .

What Went Well and What Went Wrong

  • What Went Well

    • Reimbursement clarity: “All seven MACs have published or confirmed payment rates… This resolution provides clinicians with renewed confidence of payment and removes a key barrier that has impacted procedure volumes.” .
    • Cost discipline: OpEx down 24% YoY to $23.0M; net cash usage improved to $6.2M vs $10.1M in Q2, underscoring better cash efficiency .
    • Regulatory/commercial catalysts: CE Mark for RECELL GO (launch in Germany, Italy, UK) and CMS NTAP for non-burn trauma/surgical full-thickness wounds, supporting broader adoption .

  • What Went Wrong

    • Revenue and EPS miss: Revenue $17.06M vs consensus $18.32M; EPS -$0.46 vs -$0.30; guidance cut to $70–$74M as provider reimbursement transitions and hospital VAC reviews slowed utilization * .
    • Margin pressure: Gross margin fell to 81.3% (83.7% prior year), with mix dilution from shared ASP arrangements on Cohealyx (50%) and PermeaDerm (60%) despite RECELL-only margin at 83.6% .
    • Financing/covenants: Additional $0.5M PIK fee and lowered covenant signals tighter financing environment; waiver for a “going concern” statement in the Q3 10-Q under the Sixth Amendment .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Total Revenues ($USD)$19.546M $18.418M $17.062M
Commercial Revenue ($USD)$19.5M $18.4M $17.1M
Gross Margin %83.7% 81.2% 81.3%
Total Operating Expenses ($USD)$30.162M $26.097M $23.028M
Operating Loss ($USD)$(13.806)M $(11.148)M $(9.153)M
Net Loss ($USD)$(16.205)M $(9.920)M $(13.187)M
Diluted EPS ($USD)$(0.62) $(0.38) $(0.46)
Q3 2025 Actual vs ConsensusValue
Revenue ($USD)$17.062M actual vs $18.318M consensus*
Primary EPS ($USD)-$0.46 actual vs -$0.30 consensus*
# of EstimatesRevenue: 6; EPS: 6*

Values marked with * are retrieved from S&P Global.

Product Economics (mix and margin):

  • RECELL-only gross margin: 83.6%
  • Shared ASP arrangements: Cohealyx 50%; PermeaDerm 60% (mix dilutive to margin percentage while increasing gross profit)

KPIs:

  • Cash, cash equivalents, and marketable securities: $23.3M at 9/30/25
  • Net cash use in Q3: $6.2M vs $10.1M in Q2
  • Targeted U.S. burn/trauma centers: ~200; addressable market ~$1.3B

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$76–$81M (revised Aug-7) $70–$74M (Nov-6) Lowered
Cash Flow Break-evenTimelineQ2 2026 (from Q2 press) No update; to be addressed with 2026 guidance in early Q1 2026 Maintained/pending update
GAAP ProfitabilityTimelineQ3 2026 (from Q2 press) No update; to be addressed in early Q1 2026 Maintained/pending update

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Reimbursement/MACMAC contractor pricing caused unpaid/underpaid claims; demand fell ~20%; resolution expected in H2 “All seven MACs have published or confirmed payment rates… reimbursement clarity has now largely been restored.” Improving
Product portfolio & mixLaunches of RECELL GO mini and Cohealyx; portfolio expands TAM; noted margin dilution from mix Mix continues to dilute margin % (Cohealyx 50% / PermeaDerm 60%), while RECELL-only margin 83.6% Expanding adoption; margin % pressure
Cost managementField transformation; OpEx reduction ~$2.5M/quarter expected OpEx down 24% YoY to $23.0M; cash burn improved to $6.2M Positive
Capital & covenantsFifth Amendment lowered TTM revenue covenants; 400k shares issued to lenders Sixth Amendment: Q4 TTM covenant set to $70M; $0.5M PIK fee; Q3 waiver for revenue covenant Covenants adjusted; funding review
Regulatory catalystsCE Mark expected for RECELL GO; CMS NTAP secured CE Mark received; commercialization in EU; NTAP effective Oct-1 for non-burn acute wounds Positive

Management Commentary

  • Interim CEO Cary Vance: “My focus will be on execution – building the use of RECELL®, … concentrating our efforts on approximately 200 key U.S. burn and trauma centers that represent the highest-value opportunities… an addressable market segment estimated at roughly $1.3 billion.”
  • CFO David O’Toole: “We continue to execute on our disciplined cost-management strategy… achieving a 24% year-over-year decrease in total operating expenses… We also reached an agreement with OrbiMed to waive the Q3 revenue covenant… reset the revenue covenant for the fourth quarter.”
  • Call tone: “This has been a challenging quarter… What’s changing now is how we operate… reset our commercial focus… establishing the structure and accountability needed to deliver consistent performance.”

Q&A Highlights

  • Sales incentives and go-to-market: Management is reviewing 2026 sales compensation and “will make sure that it’s aligned with what we’re trying to accomplish… simple and fair and directed towards growth,” signaling a portfolio-selling approach .
  • Covenants and capital: Company secured a Q3 revenue covenant waiver and lowered Q4 TTM covenant to $70M; further 2026 covenant amendments will be addressed with 2026 guidance. Evaluating capital funding options to support operations through cash flow break-even .
  • Reimbursement normalization: Management emphasized all MACs have published/confirmed payment rates, expected to stabilize RECELL utilization .

Estimates Context

  • Q3 2025 results vs consensus: Revenue $17.06M vs $18.32M consensus (miss); EPS -$0.46 vs -$0.30 consensus (miss). Revenue and EPS had 6 estimates each, indicating moderate analyst coverage *.
  • FY 2025 consensus at the time was ~$71.12M revenue and -$1.70 EPS; the company’s updated guidance $70–$74M brackets consensus revenue; EPS trajectory likely below prior expectations given mix and covenant constraints*.
  • Implication: Estimates likely need to be revised lower on EPS and may tighten on revenue around the new guidance range; watch for upward revisions in 2026 tied to reimbursement normalization and EU commercialization*.

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Miss vs consensus and guidance cut are negative catalysts; expect continued estimate resets and potential volatility until reimbursement normalization shows up in order flow * .
  • Execution pivot: Cost cuts are real (OpEx -24% YoY) and cash burn improving; monitor whether focused coverage of ~200 centers lifts utilization and reduces variability .
  • Margin mix: Expect overall gross margin % to remain diluted by Cohealyx/PermeaDerm mix even as gross profit and operating profit improve—track RECELL-only margin against adoption trends .
  • Financing/covenant risk: Sixth Amendment lowers Q4 covenant to $70M and adds $0.5M PIK—watch capital updates and 2026 guidance in early Q1 2026 for dilution risk/timeline to break-even .
  • Catalysts: CE Mark for RECELL GO and CMS NTAP expand addressable markets; look for EU launch traction (Germany/Italy/UK) and NTAP-driven use in trauma surgery to drive volumes .
  • Reimbursement: With all MAC rates published, procedural volumes should normalize; track Q4 demand recovery and backlog adjudication .
  • Medium-term thesis: If reimbursement stabilization and commercial focus translate to steady growth, 2026 break-even/profitability targets could become credible; monitor covenant path and capital structure to mitigate financing overhang .