Avita Medical NASDAQ: RCEL raised its full-year revenue forecast for the second consecutive quarter after third-quarter sales rose 53% from a year earlier, driven by demand for its RECELL wound treatment system and growing adoption of Cohealyx.
The company reported revenue of $26.1 million, up from $17.1 million a year earlier and 20% higher than in the second quarter. It reduced quarterly cash use to approximately $600,000 from $3.2 million in the preceding quarter and reaffirmed its expectation of reaching cash flow breakeven in the fourth quarter.
Avita now expects 2026 revenue of $92 million to $94 million, up from its previous forecast of $86 million to $89 million. The revised range implies fourth-quarter revenue of approximately $24.9 million to $26.9 million.
RECELL demand drives growth
U.S. RECELL revenue reached $22.4 million, approximately 20% above the second quarter, while unit volume rose about 21% sequentially to 3,196. President and CEO Cary Vance attributed the increase to higher procedure volumes and ordering across accounts.
Vance said third-quarter results may have benefited from seasonally higher summer burn admissions. In response to an analyst’s question, he estimated that approximately $1 million of revenue reflected higher patient volumes or larger wounds, while cautioning that the company needs another summer to better understand third-quarter dynamics.
He said the majority of the quarter’s growth reflected the company’s strategy of expanding use among existing accounts, adding physicians and procedures, and supporting treatment of different wound types. International RECELL revenue was approximately $900,000, essentially flat with the second quarter.
Vance also said a new family of physician billing codes for skin cell suspension autografting is scheduled to take effect on Jan. 1, 2027. The Centers for Medicare & Medicaid Services established national relative value units for physicians performing procedures using RECELL, replacing regional Medicare administrative contractor pricing once the new framework takes effect.
Cohealyx and PermeaDerm adoption
Cohealyx revenue increased approximately 21% sequentially to $2.1 million as hospitals completed value analysis reviews and began using the product, Vance said. Interim results from the Cohealyx I study showed a median time to graft readiness of about 11 days. The company expects the complete six-month follow-up data set this month.
PermeaDerm revenue was approximately $600,000, essentially unchanged from the second quarter. Vance said individual order timing can affect quarterly comparisons at this early stage and that the company is working to build more regular use.
He pointed to results reported in August from a randomized study of 40 patients across 11 U.S. burn centers. The study met its primary endpoint, with PermeaDerm demonstrating a 70% economic advantage over allograft based on product cost per percentage of total body surface area treated. Preparation time was approximately 96% lower, while graft take and wound healing outcomes were comparable, Vance said.
Loss narrows as liquidity improves
Third-quarter gross margin rose to 84%, compared with 81.3% a year earlier and 81.9% in the second quarter. CFO David O’Toole attributed the improvement partly to higher RECELL revenue and manufacturing efficiencies. Operating expenses were $24.6 million, flat sequentially and up 7% from a year earlier.
Net loss narrowed to $6.2 million, or $0.20 per share, from $13.2 million, or $0.46 per share, a year earlier. The latest result included approximately $2.1 million in noncash expense from warrant revaluation, O’Toole said.
Avita ended September with approximately $10.5 million in cash, cash equivalents and marketable securities. After the quarter, it received the remaining $10 million under its Perceptive Advisors credit facility after meeting a trailing-12-month revenue milestone.
O’Toole said management and the company’s independent auditor concluded that substantial doubt about Avita’s ability to continue as a going concern had been alleviated. He added that the third-quarter Form 10-Q no longer includes that qualification.
Looking to 2027, O’Toole said the company does not expect a significant increase in headcount and intends to keep operating expenses around current levels, although sales commissions will vary with revenue. He also noted that first-quarter cash use will include payments such as incentive compensation.
About Avita Medical (NASDAQ:RCEL)
Avita Medical, Inc NASDAQ: RCEL is a regenerative medicine company focused on developing and commercializing therapies that use a patient's own cells to help restore damaged skin and tissue. Its lead product is the RECELL System, an autologous cell-harvesting device designed to prepare a suspension of a patient's skin cells at the point of care for application to wounds.
RECELL is used in the treatment of certain thermal burn wounds and other skin injuries. The system is intended to support wound healing and may reduce the amount of donor skin required for grafting by enabling clinicians to create a cell suspension from a small sample of the patient's healthy skin.
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