Q1 2026 AVITA Medical Inc Earnings Call

Speaker #1: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you would need to press star 11 on your telephone and you will then hear an automated message advising your hand is raised.

Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. I would like now to turn the conference over to Ben Atkins. Please go ahead.

Speaker #1: To withdraw your question, please press star 11 again. Please be advised that today's conference is being conference over to Ben Atkins. Please go ahead.

Speaker #2: Thank you, Operator. Welcome to AVITA Medical's first quarter 2026 earnings call. Joining me on today's call are Cary Vance, President and Chief Executive Officer and David OToole, Chief Financial Officer.

Ben Atkins: Thank you, operator. Welcome to AVITA Medical's Q1 2026 Earnings Call. Joining me on today's call are Cary Vance, President and Chief Executive Officer, and David O'Toole, Chief Financial Officer. Today's earnings release and presentation are available on our website at www.avitamedical.com under the investor relations section. Before we begin, I would like to remind you that this call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results to differ materially from any expectations expressed or implied by the forward-looking statements. Please review our most recent filings with the SEC for comprehensive description of the risk factors. Any forward-looking statements provided during this call are based on management's expectations as of today. I will now turn the call over to Cary.

Speaker #2: Today's earnings release and presentation are available on our website at www.avitamedical.com under the Investor Relations section. Before we begin, I would like to remind you that this call includes forward-looking statements within the meaning of the private securities litigation reform act of 1995.

Speaker #2: These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results to differ materially from any expectations expressed or implied by the forward-looking statements.

Speaker #2: Please review our most recent filings with the SEC for comprehensive descriptions of the risk factors. Any forward-looking statements provided during this call are based on management's expectations as of today.

Speaker #2: I will now turn the call over to Cary.

Speaker #3: Good afternoon in the US and good morning in Australia. Thank you for joining us. Before we turn to the quarter, I want to briefly acknowledge my appointment as President and Chief Executive Officer.

Cary Vance: Good afternoon in the US, and good morning in Australia. Thank you for joining us. Before we turn to the quarter, I want to briefly acknowledge my appointment as President and Chief Executive Officer. Over the past 6 months, I've had the opportunity to serve in this role on an interim basis, working closely with our team, our customers, and the board. I appreciate the confidence the board has placed in me following its thorough search process, and I'm excited to lead AVITA into this next phase. I'd also like to recognize our new Board Chair, Jan Stern Reed. Jan has been deeply engaged with the company, and I look forward to working closely with her and the board as we continue to execute on our priorities. Over the same period, I've spent time visiting the hospitals using our products and speaking with surgeons.

Speaker #3: Over the past six months, I've had the opportunity to serve in this role on an interim basis, working closely with our team, our customers, and the board.

Speaker #3: I appreciate the confidence the board has placed in me following its thorough search process, and I'm excited to lead AVITA into this next phase.

Speaker #3: I'd also like to recognize our new board chair, Jan Stern-Reid. Jan has been deeply engaged with the company and I look forward to working closely with her and the board as we continue to execute on our priorities.

Speaker #3: Over the same period, I've spent time visiting the hospitals using our products and speaking with surgeons. And what's clear to me is that this is not an abstract business.

Cary Vance: What's clear to me is that this is not an abstract business. When you're in the operating room, you see firsthand the partnership we have with surgeons and the role our products play in helping patients recover and return to their lives. That is what drives our mission. Turning to Q1, I'll start by briefly connecting the quarter to where we've been, because the progression over the past 2 quarters is relevant to understanding what you're seeing in Q1. Over the past 2 quarters, we've been focused on 2 specific priorities. First, stabilizing the business. That meant working through the disruption to clinical reimbursement for RECELL, re-engaging our core accounts, and reestablishing a consistent procedure-based demand cadence. Second, improving how we operate.

Speaker #3: When you're in the operating room, you see firsthand the partnership we have with surgeons. And the role our products play in helping patients recover and return to their lives.

Speaker #3: That is what drives our mission. Turning to the first quarter, I'll start by briefly connecting the quarter to where we've been. Because the progression over the past couple of quarters is relevant to understanding what you're seeing in Q1.

Speaker #3: Over the past two quarters, we've been focused on two specific priorities. First, stabilizing the business. That meant working through the disruption to clinical reimbursement for resell.

Speaker #3: Re-engaging our core accounts and re-establishing a consistent procedure-based demand cadence. Second, improving how we operate. We simplified our focus around our highest value centers.

Speaker #1: Prediction, and my intent is to grow sequentially quarter over quarter this year, so that the company kind of regains a lot of its credibility that I think we lost last year, to a good degree.

Cary Vance: We simplified our focus around our highest value centers, re-energized our sales organization, and put in place a new credit agreement with terms that are better aligned to the business and our expected revenue trajectory. Q1 has been the quarter where we have begun to see those changes translate into more consistent performance. Let me begin with the headline results. As you saw in the press release, and as reflected on this slide, revenue was approximately $19.3 million, up 4% year-over-year and approximately 10% sequentially, building on the momentum we saw exiting Q4 and representing our highest quarterly revenue over the last year. David will walk through the full financials in more detail, but importantly, operating expenses declined year-over-year, reflecting the cost-saving actions we implemented in Q2 2025. We are reaffirming full year guidance of $80 to $85 million.

Speaker #3: Re-energized our sales organization and put in place a new credit agreement with terms that are better aligned to the business and are expected revenue trajectory.

Speaker #1: And also obtain and regain some of the excitement over the potential the company has to grow in all aspects of our portfolio. What you can expect to hear from me in August is that that growth trajectory has continued.

Speaker #3: Q1 has been the quarter where we have begun to see those changes translate into more consistent performance. Let me begin with the headline results.

Speaker #3: As you saw in the press release, and as reflected on this slide, revenue was approximately 19.3 million dollars, up 4% year over year, and approximately 10% sequentially.

Speaker #1: And that it will continue. So I feel really good about the business. I was named permanent CEO a couple of weeks ago—again, part of that stabilization and building back the company.

Speaker #3: Building on the momentum, we saw exiting Q4 and representing our highest quarterly revenue over the last year. David will walk through the full financials in more detail.

Speaker #1: I think, by the end of 2026, we'll look back on '25 as having a number of external headwinds—a number of things that kind of slowed our growth trajectory.

Speaker #3: But importantly, operating expenses declined year over year, reflecting the cost-saving actions we implemented in the second quarter of 2025. And we are reaffirming full-year guidance of 80 to 85 million dollars.

Speaker #1: And that it's kind of a one-off year in that respect, in that we're back on track. So let me just talk to you about a few of the things that have occurred over the past quarter of note.

Speaker #1: Like I said, number one, we're about revenue growth on all of our products, and we went from $17.6 million to $10.3 million. So there were a few highlights in the quarter.

Speaker #3: We also saw continued progress across the business in advancement across our product portfolio. I'll speak to these during my remarks. As we think about the quarter, there are three points I would highlight.

Cary Vance: We also saw continued progress across the business and advancement across our product portfolio. I'll speak to these during my remarks. As we think about the quarter, there are three points I would highlight. First, the year-over-year comparison is still influenced by prior ordering patterns. The business a year ago included more bulk purchasing behavior that we no longer see today. Second, sequential quarter-over-quarter performance is a better indicator of underlying demand. Revenue increased approximately 10% from Q4, with product demand building momentum through the quarter and continuing into April. Third, and most important, is how the operating cadence is improving. We are seeing more frequent, smaller orders, better alignment between usage and purchasing, and improved engagement across our core accounts. This reflects a shift away from past variability towards consistency and ultimately predictability going forward. Let me now go through some dynamics across our portfolio.

Speaker #1: One was the BARDA contract, and so I want to make sure you understand what that is and what that isn't. So that $25.5 million is a big number.

Speaker #3: First, the year-over-year comparison is still influenced by prior ordering patterns. The business a year ago included more bulk purchasing behavior that we no longer see today.

Speaker #1: Now, that $25 million over 10 years is only realized if something bad happens, at scale, in the US—which again, over 10 years, could certainly occur.

Speaker #3: Second, sequential quarter-over-quarter performance is a better indicator of underlying demand. Revenue increased approximately 10% from Q4, with product demand building momentum through the quarter and continuing into April.

Speaker #1: We obviously hope that it doesn't, but we're in the acute wound care business. And so, while we never want bad things to happen to individuals or to many people all at once, we are gratified to know that our products will help them in that time of need, and that our business will benefit from those products being used.

Speaker #3: Third, and most important, is how the operating cadence is improving. We are seeing more frequent smaller orders, better alignment between usage and purchasing, and improved engagement across our core accounts.

Speaker #3: This reflects a shift away from past variability towards consistency. And ultimately, predictability going forward. Let me now go through some dynamics across our portfolio.

Speaker #1: So if something happens, they have kind of first right on our safety stock. It doesn't require us to do anything extra, or any extra costs associated.

Speaker #1: We have a safety stock, and we just rotate that, and that's what we use as being available for BARDA for that contract. What we are guaranteed is a regular administrative amount of revenue on a monthly basis, which you can generally calculate at about $100,000 a quarter.

Speaker #3: Turning first to resell. At this point, all seven Medicare administrative contractors have published payment rates for clinician use. What we are seeing as a result is a gradual return to utilization patterns that reflect procedural demand rather than reimbursement uncertainty.

Cary Vance: Turning first to RECELL. At this point, all 7 Medicare Administrative Contractors have published payment rates for clinician use. What we are seeing as a result is a gradual return to utilization patterns that reflect procedural demand rather than reimbursement uncertainty. That shows up in both re-engagement within the most affected burn centers and sequential quarterly improvement in ordering and case activity. We are also beginning to see expansion in use cases, particularly with RECELL GO mini in smaller burns and trauma settings. Internationally, recent regulatory clearances in Australia and New Zealand position us to expand RECELL GO in those markets. In addition, during the quarter, we announced a new long-term agreement with BARDA to support US burn emergency preparedness. This builds on a longstanding partnership and reflects the role RECELL can play in a mass casualty response, where rapid treatment and scalability are critical.

Speaker #3: That shows up in both re-engagement within the most affected burn centers and sequential quarterly improvement in ordering and case activity. We are also beginning to see expansion in use cases, particularly with resale goal mini in smaller burns and trauma settings.

Speaker #1: For the next 10 years. And so that's what you can expect. I think moreover, other than the dollars, is that it's a great validation by the US government and the burn and trauma surgeons that they coordinate with, that resell is a crucial part of the planning for, for disaster relief and for treating patients should that kind of event occur.

Speaker #3: Internationally, recent regulatory clearances in Australia and New Zealand position us to expand resale goal in those markets. In addition, during the quarter, we announced a new long-term agreement with BARDA to support US burn emergency preparedness.

Speaker #1: And so, that's great for us from a just from a marketing standpoint and from a validation standpoint clinically. our Cohelix One interim data, again, this is a post-market study.

Speaker #1: But in general, operating expenses are going to be in that $24–25 million range. Of that, $3 million is considered non-cash. So we're in the $22 million range of cash out the door.

Speaker #1: What's great about it is that we were able to speak about it on an interim basis before we submit that data at the end of the year, and it's published early next year.

Speaker #3: This builds on a long-standing partnership and reflects the role resale can play in a mass casualty response, where rapid treatment and scalability are critical.

Speaker #1: we're not giving actual guidance on when we're going to cross over. but you can see that if we grow the revenue sequentially from the 19.3 million, and you can pick an, a number of what you think the, sequential growth would be, w and if it's, you know, 5 to 10 percent or, or something like that, you can come to the calculation on when we do cross over, cash flow breakeven.

Speaker #1: And essentially, the endpoint for that clinical study is speed to grafting. And speed and speed to healing and speed to grafting is the key going forward, not just now, but in the years to come.

Speaker #3: From a business perspective, this provides a modest level of recurring readiness revenue, while also reinforcing the importance of resale within the broader healthcare system.

Cary Vance: From a business perspective, this provides a modest level of recurring readiness revenue while also reinforcing the importance of RECELL within the broader healthcare system. It underscores the clinical relevance and reliability of the platform in high-acuity settings and the confidence of a key government partner in our ability to deliver at scale. RECELL remains the foundation of the business and is again a driver of utilization as we build across our accounts. Let me turn to Cohealyx. From a commercial standpoint, Q1 represents early-stage adoption with encouraging signals. We saw, for example, an increasing number of ordering accounts as VAC approvals advance and early repeat usage by initial adopters. This is consistent with what we would expect at this stage of a product life cycle. An important development in the quarter was the interim clinical data from the Cohealyx-I study.

Speaker #3: More broadly, it underscores the clinical relevance and reliability of the platform in high-acuity settings. And the confidence of a key government partner in our ability to deliver at scale.

Speaker #1: hospitals and clinicians want patients to heal faster, for their benefit, and for the economic benefit of the hospital itself, because it costs quite a bit of money to take care of them.

Speaker #3: So stepping back, resale remains the foundation of the business and is, again, a driver of utilization as we build across our accounts. Next, let me turn to Cohelix.

Speaker #1: So if you look at the resell 36% sooner, out of the hospital reducing length of stay, and you add to that a Cohelix readiness to graft, which is, up to 20 days sooner.

Speaker #1: We're not far from it, given that our cash expenses are in the range of $22 million and we're generating, you know, $19.3 million, 85% gross margin. We just have to grow that revenue sequentially, quarterly, for the next few quarters and we'll get to that point.

Speaker #3: From a commercial standpoint, Q1 represents early-stage adoption with encouraging signals. We saw, for example, an increasing number of ordering accounts as VAC approvals advanced, and early repeat usage by initial adopters.

Speaker #1: So in a week or so, as opposed to three weeks or so, three or four weeks with some of the competition. It's a big deal for them and it's for the patient themselves.

Speaker #1: You think about 20 that 20-day difference between Cohelix and some of our competitors, that's 20 days less pain, 20 days less dressing changes, 20 days less chance of infection, and, and so really powerful, I think, interim data that we've shared.

Speaker #1: The first question was, do we have enough cash to get to that point of cash flow breakeven? The simple answer, in our opinion, is yes.

Speaker #3: This is consistent with what we would expect at this stage of a product lifecycle. An important development in the quarter was the interim clinical data from the Cohelix One study.

Speaker #1: You know, we have $14.3 million on the balance sheet. The cash burn is going to be dramatically less this quarter. And as we grow revenue, that cash burn is going to continue to decrease over the next few quarters.

Speaker #3: At a high level, the data shows a significant reduction in time to graft readiness, approximately 20 days versus benchmark, with consistent outcomes across patients.

Cary Vance: At a high level, the data shows a significant reduction in time to graft readiness, approximately 20 days versus benchmark, with consistent outcomes across patients. We also saw a median time to grafting of approximately 11 days. Early grafting achieved in some cases within the 1st week and high levels of investigator satisfaction. Importantly, this data set is now supporting ongoing VAC reviews, helping to reinforce the clinical value proposition as hospitals evaluate adoption. We also continue to hear positive feedback from clinicians already using Cohealyx, particularly around the consistency of outcomes, which is contributing to early repeat use. We expect a full data set later this year, which will be an important next step in supporting broader adoption. I would encourage you to listen to the key opinion leader webinar we hosted in April, available on our website.

Speaker #1: I would encourage any of you to go on our website, and watch or listen to the webinar that we did, at the American Burn Association Conference.

Speaker #3: We also saw a median time to grafting of approximately 11 days. Early grafting achieved in some cases within the first week, and high levels of investigators' satisfaction.

Speaker #1: Would we like to have additional cash on the balance sheet as a small company? The answer is yes, and we're going to address that at some point this summer, if necessary.

Speaker #1: We released some of that data. We talked about some of it with our medical affairs person, Dr. Katie Bush, but then we had two physicians there that talked about real-world, how are they incorporating Cohelix in their standard of care, and investors and analysts were able to ask questions.

Speaker #3: Importantly, this data set is now supporting ongoing VAC reviews, helping to reinforce the clinical value proposition as hospitals evaluate adoption. We also continue to hear positive feedback from clinicians already using Cohelix.

Speaker #1: And so I so I think it was extremely powerful to hear their perspective, on it. So it's on our website. I would encourage you to, to listen in to that again.

Speaker #3: Particularly around the consistency of outcomes, which is contributing to early repeat use. We expect the full data set later this year, which will be an important next step in supporting broader adoption.

Speaker #3: And I would encourage you to listen to the key opinion leader webinar we hosted in April, available on our website. That session walks through the data in more detail and, importantly, illustrates how Cohelix is being integrated into surgical workflows, including its use alongside resale in staged procedures.

Cary Vance: That session walks through the data in more detail and importantly illustrates how Cohealyx is being integrated into surgical workflows, including its use alongside RECELL in stage procedures. Finally, touching on PermeaDerm. From a commercial standpoint, performance is still developing. This quarter, we introduced new clinical positioning relative to cadaveric allograft, focused on its role as a more affordable biosynthetic alternative in wound coverage and healing. We expect data from the PermeaDerm I study later this year. Early signals, including histology, indicate comparable biological performance to cadaveric allograft. Similar to Cohealyx, the near-term role of PermeaDerm is to build clinical confidence, clear positioning within the treatment pathway, and familiarity among surgeons. We had a strong presence at the American Burn Association annual meeting in April, which remains the most important clinical and commercial forum for our business.

Speaker #3: Finally, touching on Permioderm, from a commercial standpoint, performance is still developing. This quarter, we introduced new clinical positioning relative to cadaveric allograft. Focused on its role as a more affordable biosynthetic alternative in wound coverage and healing.

Speaker #3: We expect data from the Permioderm One study later this year early signals, including histology, indicate comparable biological performance to cadaveric allograft. So similar to Cohelix, the near-term role of Permioderm is to build clinical confidence, clear positioning within the treatment pathway, and familiarity among surgeons.

Speaker #3: With a strong presence at the American Burn Association annual meeting in April, which remains the most important clinical and commercial forum for our business.

Speaker #3: What stood out this year was the level of engagement across the portfolio. We saw broad scientific participation, meaningful clinical interaction across multiple forums, and increasing discussion around how our products are used together in practice.

Cary Vance: What stood out this year was the level of engagement across the portfolio. We saw broad scientific participation, meaningful clinical interaction across multiple forums, and increasing discussion around how our products are used together in practice. Importantly, this was not just awareness, it was active clinical dialogue, including education, case sharing, and feedback from surgeons. The takeaway from this year's ABA conference, we are seeing growing clinical engagement and increasing integration into clinical discussions and workflows, supported by both data and real-world experience. In summary, over the past two quarters, we've stabilized the business and improved how we operate. What we're now seeing is a return to more consistent utilization across our accounts, with early signs of growth as that foundation takes hold. At the same time, the momentum we saw at ABA, together with the Cohealyx clinical data, reinforces the clinical differentiation and value of our platform.

Speaker #3: Importantly, this was not just awareness. It was active clinical dialogue, including education, case sharing, and feedback from surgeons. So the takeaway from this year's AVA conference, we are seeing growing clinical engagement and increasing integration into clinical discussions and workflows.

Speaker #3: Supported by both data and real-world experience. In summary, over the past two quarters, we've stabilized the business and improved how we operate. What we're now seeing is a return to more consistent utilization across our accounts, with early signs of growth as that foundation takes hold.

Speaker #3: At the same time, the momentum we saw at AVA together with the Cohelix clinical data reinforces the clinical differentiation and value of our platform.

Speaker #3: As we look ahead to Q2, our focus is on continued sequential growth, driven by increasing utilization across our core burn and Tier 1 trauma accounts, and demonstrating our progress is repeatable.

Cary Vance: As we look ahead to Q2, our focus is on continued sequential growth, driven by increasing utilization across our core burn and Tier 1 trauma accounts, and demonstrating our progress is repeatable. With that, let me hand to David to review the financials in more detail.

Speaker #3: With that, let me hand to David to review the financials in more detail.

Speaker #1: Resell Go was cleared in Australia and New Zealand here, close to home. We feel really good about our distributor here in Australia, just, great relationships, aggressive, smart, and now with Resell Go approval, really have an opportunity to use that to, to expand the business here and grow the business.

Speaker #5: Thank you, Cary. And good day to everyone. As Cary outlined, the first quarter reflects continued progress as we move from stabilization into a more execution-focused phase of the business.

David O'Toole: Thank you, Cary, and good day to everyone. As Cary outlined, Q1 reflects continued progress as we move from stabilization into a more execution-focused phase of the business. My prepared comments today will focus on how that progress is showing up in our financial results across revenue, gross margin, operating expenses, and cash. Turning first to revenue. Total revenue for Q1 was approximately $19.3 million, representing 4% growth year over year. Approximately 10% sequential growth from Q4 2025. Growth in Q1 was driven by contributions from Cohealyx, RECELL GO mini, and improving RECELL utilization as reimbursement dynamics continue to normalize. Importantly, we are seeing ordering patterns increasingly align with underlying procedural demand. This is contributing to improved consistency in revenue, with sales performance strengthening through Q1 and showing momentum as we exited March.

Speaker #5: My prepared comments today will focus on how that progress is showing up in our financial results, across revenue, gross margin, operating expenses, and cash.

Speaker #1: We also have a physician who moved from the US, who was a heavy resale user. She moved to the Alford in, in Melbourne here.

Speaker #1: And so she's already done three cases here in the first month that she's been here. So, I think there's a lot of momentum in Australia, around resell and around AVITA, which is great.

Speaker #5: Turning first to revenue, total revenue for the first quarter was approximately $19.3 million, representing 4% growth year over year, and approximately 10% sequential growth from the fourth quarter of 2025.

Speaker #1: And then finally, just, American Burn Association, in, in April, we had a great presence, a great buzz. we're seen as an innovator in the space.

Speaker #5: Growth in the quarter was driven by contributions from Cohelix, resale GoMini, and improving resale utilization as reimbursement dynamics continue to normalize. Importantly, we are seeing ordering patterns increasingly align with underlying procedural demand, this is contributing to improved consistency in revenue, with sales performance strengthening through the quarter and showing momentum as we exited March.

Speaker #1: And it was great that, Dr. Fiona Wood was there. She received lifetime achievement award at the American Burn Association. She was on podium. She was in the booth.

Speaker #1: she, you know, she was stopped in the hallway. People wanted their picture taken with her, and so on. So it's a it was extremely proud moment for us to have our founder there to have, for her as well, to see where this product and where this company has gone.

Speaker #5: With our Q1 results, we are reaffirming our full year 2026 net revenue guidance of 80 to 85 million. Turning to gross margin, gross profit margin for the quarter was 81.7%, compared to 84.7% in the prior year period.

David O'Toole: With our Q1 results, we are reaffirming our full year 2026 net revenue guidance of $80 million to $85 million. Turning to gross margin. Gross profit margin for the quarter was 81.7%, compared to 84.7% in the prior year period. The change was primarily driven by certain required inventory reserves and product mix, with Cohealyx and PermeaDerm contributing a greater proportion of revenue. As we've discussed previously, while this shift in product mix impacts reported gross margin percentage, these products contribute incremental gross profit without a proportional increase in operating expenses. As a result, they remain accretive to absolute gross dollars and supportive of operating leverage over time. Consistent with the framework we outlined with our broader portfolio coming out of 2025. RECELL gross margin remains strong at approximately 85%, and we expect that to continue. Turning to operating expenses.

Speaker #1: And so just a great, presence and a great impact at the American Burn Association Conference last, last month. We've talked for a year about the, the max, the Medicare Administrative Contractors, and how they took over the payment for physicians.

Speaker #1: On resell and how they kind of dropped the ball and didn't publish those rates and weren't paying. that's all been resolved, all seven max have published, all the rates are consistent.

Speaker #5: The change was primarily driven by certain required inventory reserves and product mix. With Cohelix and Permioderm, contributing a greater proportion of revenue. As we've discussed previously, while this shift in product mix impacts reported gross margin percentage, these products contribute incremental gross profit without a proportional increase in operating expenses.

Speaker #1: And they're making those payments. And they've, made payments in, going back as well. that should have been made in the past. And so that's our physicians are happy with that.

Speaker #1: I think for now, what we we're doing the usual work of going hospital by hospital, making sure that, you know, coders and physicians are aware of, you know, A, they've been published, and B, you know, is there a correct way of doing that?

Speaker #5: As a result, they remain accretive to absolute gross dollars, and supportive of operating leverage over time. Consistent with the framework we outlined with our broader portfolio coming out of 2025.

Speaker #1: And is there anything we can do to help resolve that? Because we're kind of arm's length away from it, but we do have healthcare economics people in the field that now are kind of hospital by hospital, making sure we're optimizing the situation.

Speaker #5: Resale gross margin remains strong at approximately 85%, and we expect that to continue. Turning to operating expenses, total operating expenses were $24.5 million, down 11% year over year.

Speaker #1: This is what I talked about, six months ago. I talked about all the headwinds that the company was experiencing: VAC committees and the MAC and, and the Salesforce changes in April.

David O'Toole: Total operating expenses were $24.5 million, down 11% year over year. This reflects continued execution against the cost optimization initiative, including transformation of the sales force implemented in 2025, and reinforces that we are operating with a lower and more disciplined cost base. Importantly, this structure is now stable and aligned with the current scale of the business. As revenue grows, we expect this to support improved operating leverage. Net loss for the quarter was $10.6 million, or $0.35 per basic and fully diluted share, an improvement compared to $13.9 million, or $0.53 per basic and fully diluted share in the prior year period. Now turning to cash, which we recognize as a key focus. Net cash use for the quarter was approximately $9.9 million.

Speaker #5: This reflects continued execution against the cost optimization initiative, including transformation of the sales force, implemented in 2025, and reinforces that we are operating with a lower and more disciplined cost base.

Speaker #1: That was a disruption. If you take all three of those things, what I said at the time was those are headwinds that are kind of keeping us from taking off.

Speaker #1: And they would turn into tailwinds. If you go back, that's the that's the verbiage I used. That's what's happening. So right now, these, these payments happening with physicians, that's a great thing for us.

Speaker #5: Importantly, this structure is now stable, and aligned with the current scale of the business. As revenue grows, we expect this to support improved operating leverage.

Speaker #1: They make more money if they use resell. Before, they were making nothing if they used resell because of the problem. Now they're making more and so again, that tailwind has turned into a, or that headwind has turned into a tailwind.

Speaker #5: Net loss for the quarter was $10.6 million, or 35 cents per basic and fully diluted share, and improvement compared to $13.9 million, or 53 cents per basic and fully diluted share, in the prior year period.

Speaker #1: The same thing goes with the VACs. You know, it's, it's kind of a slog through the, the VACs for Cohelix and for Permeaderm, but especially for Cohelix.

Speaker #1: But once it comes out of VAC, you have that champion that put it into the VAC who's now championing commercial adoption and utilization of Cohelix.

Speaker #1: Again, another tailwind that was a headwind. and even the Salesforce optimization. So kind of changing and rejiggering the Salesforce, taking the opportunity to, to keep the best and, and to, to cut the, the average, let's say.

Speaker #5: Now turning to cash, which we recognize as a key focus. Net cash use for the quarter was approximately $9.9 million. As expected, cash use was higher in the first quarter, driven by seasonal compensation and other one-time payments.

David O'Toole: As expected, cash use was higher in Q1, driven by seasonal compensation and other one-time payments, and was further elevated by the timing of revenue and collections. Cash receipts obviously lag revenue, and with a greater proportion of product sales occurring later in Q1, our cash receipts were negatively impacted, which increased our cash use. As we move into Q2, these timing dynamics have reversed. Seasonal and one-time items are completed, and collections from strong late Q1 revenue and early Q2 sales activity are driving higher cash receipts. Combined with ongoing cost discipline, this gives us strong confidence in a significant decrease in cash use in Q2. We ended the quarter with approximately $14.3 million in cash and marketable securities.

Speaker #1: And now that Salesforce with the great relationships and the great talent that they have fully staffed, is really starting to pay dividends around growth.

Speaker #5: And was further elevated by the timing of revenue and collections. Cash receipts obviously lag revenue. And with a greater proportion of product sales occurring later in the first quarter, our cash receipts were negatively impacted, which increased our cash use.

Speaker #1: And again, you see that a bit in the numbers for Q1, and you'll continue to see that. again, this is the Cohelix One study, some of the details around what I already talked about.

Speaker #1: On average, 33 days for our competitors. Readiness to grafting. versus 13 days for Cohelix. As little as five days and on average, kind of that, that, that week and a half or so.

Speaker #5: As we move into the second quarter, these timing dynamics have reversed, seasonal and one-time items are completed, and collections from strong late first quarter revenue and early second quarter sales activity are driving higher cash receipts.

Speaker #1: you have a couple quotes here from Dr. Bell and Dr. Dr. Kassenon. Those are the two physicians that were on that webinar at ABA.

Speaker #5: Combined with ongoing cost discipline, this gives us strong confidence in a significant decrease in cash use in the second quarter. We ended the quarter with approximately $14.3 million in cash, and marketable securities.

Speaker #1: That again, I encourage you to listen to that. But, an extremely, valuable, competitive dynamic there for us in a competitive space. Think about our business and our portfolio that we're used to competing with resell, which is basically competing against the way they've been grafting for a hundred years.

Speaker #5: Regarding our debt facility, we remain in compliance with a trailing 12-month revenue and minimum tax covenants under our credit facility, which are aligned with our current operating trajectory.

David O'Toole: Regarding our debt facility, we remain in compliance with the trailing 12-month revenue and minimum tax covenants under our credit facility, which are aligned with our current operating trajectory. Importantly, this facility, put in place in January with Perceptive Advisors, was structured to provide greater flexibility than our prior credit agreement, with covenant thresholds set meaningfully below our expected annual revenue levels and a reduced minimum cash requirement. Given the level of headroom, we would not expect the revenue covenants under this agreement to be an area of focus going forward. For context, the Q2 trailing 12-month revenue covenant of $69 million implies a Q2 revenue requirement of only $15 million, which remains well below our recent quarterly revenue levels. The structure is interest only and includes additional capacity subject to achieving a defined revenue milestone.

Speaker #1: Don't do things the way they've been done for that long. Do it with resell. It's economically beneficial, clinically beneficial, all of that. That's been the way we've sold in the past.

Speaker #5: Importantly, this facility put in place in January with perceptive advisors the structure to provide greater flexibility than our prior credit agreement, with covenant thresholds set meaningfully below our expected annual revenue levels and a reduced minimum cash requirement.

Speaker #1: Now we're a little bit more conventional when it comes to Cohelix and Permeaderm, where we have competitor competitors. We're the competitors. That we have to have a value proposition that resonates.

Speaker #1: And the economic, proposition here that this, this reduction in time represents is real, as well as obviously, you know, workflow, in terms of the readiness, the, the quality of the wound bed and the vascularization, in terms of how it will accept that graft.

Speaker #5: Given the level of headroom, we would not expect the revenue covenants under this agreement to be an area of focus going forward. For context, the second quarter trailing 12-month revenue covenant of $69 million implies a second quarter revenue requirement of only $15 million.

Speaker #1: How well the patient will heal, and, and again, how soon the patient can leave. The hospital and as part of that continuum, this wound bed preparation is a lot of times the thing that holds everything up.

Speaker #5: Which remains well below our recent quarterly revenue levels. The structure of interest-only and includes additional capacity subject to achieving a defined revenue milestone. Taken together, these terms were designed to support execution rather than constrain it.

Speaker #1: And so us being able to graft sooner is, is a major thing. let me pass it over to, to David to just take us through this, financial slide, please.

David O'Toole: Taken together, these terms were designed to support execution rather than constrain it, providing improved visibility and headroom as we scale the business. As a result, we believe our current capital structure is well aligned with our operating plan and supports our ability to manage the business towards continued growth, improved cost efficiency, and ultimately, financial sustainability. In summary, we are seeing sequential quarterly revenue growth with improving demand consistency, a stable and disciplined operating cost structure, and clear visibility to lower cash use as we move into the Q2. These elements reflect continued execution against the framework we established in 2025 and reinforce our focus on delivering consistent and repeatable performance through the year. With that, I'll hand it back to Cary.

Speaker #5: Providing improved visibility and headroom as we scale the business. As a result, we believe our current capital structure is well aligned with our operating plan and supports our ability to manage the business for continued growth, improved cost efficiency, and ultimately financial sustainability.

Speaker #1: Gary, thanks. and good day to everyone. nice to be back here in, in Melbourne again. as Carrie mentioned, we had a very strong first quarter.

Speaker #1: 19.3 million. that compares to, 17.6 million in the Q, Q4. Roughly a 10% increase sequentially. Even comparing that to, Q1 of 2025, that was about a 4% increase.

Speaker #5: In summary, we are seeing sequential quarterly revenue growth when the improving demand consistency. A stable and disciplined operating cost structure and clear visibility to lower cash use as we move into the second quarter.

Speaker #1: And comparing the revenue, the quality of the revenue this quarter versus the quality of the revenue in the first quarter of 2025, it's not necessarily comparing apples to apples.

Speaker #1: We had some bulk ordering that was taking place in the first half of 2025. That is not happening any longer. This is all organic growth.

Speaker #5: These elements reflect continued execution against the framework we established in 2025 and reinforce our focus on delivering consistent, repeatable performance through the year. With that, I'll hand it back to Gary.

Speaker #1: And it represents really, in my mind, a high watermark for revenue. And the company, we did have a larger revenue at $19.4 million back in Q3 of 2024.

Speaker #1: Thank you, David. So just to summarize the first quarter, we delivered a solid revenue performance in Q1, supported by improving resale utilization. We exited the quarter with increasingly consistent procedure-driven demand across our core accounts.

Cary Vance: Thank you, David. Just to summarize Q1, we delivered a solid revenue performance in Q1, supported by improving RECELL utilization. We exited the quarter with increasingly consistent procedure-driven demand across our core accounts. We generated compelling Cohealyx clinical data, reinforcing its differentiation over other dermal matrices. We strengthened our leadership as we shift gears into this next phase of our AVITA journey. As we look ahead to Q2, the focus is clear: build sequential growth and demonstrate recurring progress across our business. With that, let's go to questions.

Speaker #1: But again, not necessarily apples to apples. And we see that over the next three quarters, that $19.3 million—we're going to grow that sequentially.

Speaker #1: We generated compelling Cohelix clinical data reinforcing its differentiation over other dermal matrices. And we strengthened our leadership as we shift gears into this next phase of our AVITA journey.

Speaker #1: Looking at gross profit margin, we're right at 82%. I expect that to stay there. Over time, we are at 85% gross margin for resell only.

Speaker #1: And then we have some degradation of the gross margin because of PermeaDerm and Cohelix, because we do the ASP sharing that we've talked about previously.

Speaker #1: As we look ahead to Q2, the focus is clear. Build sequential growth and demonstrate recurring progress across our business. With that, let's go to questions.

Speaker #1: We have a 60/40 split with Permeaderm with our partner Aesthetical, and then a 50/50 split with our partner Regenity with Cohelix. And as those products become more impactful, the gross margin will decrease.

Speaker #2: Thank you. And as a reminder to ask a question, please press star 11 on your telephone. And wait for your name to be announced.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from Frank Takkinen with Lake Street Capital Markets. Your line's open.

Speaker #2: To withdraw your question, please press star 11 again. And our first question comes from Frank Takkinen with Lake Street Capital Markets. Your line's open.

Speaker #1: But we don't see it going below 80%, for the simple reason that we think that RECELL is going to grow even faster than the Cohesion and Permeaderm.

Speaker #3: Great. Thank you for taking the questions. And congrats on a solid Q1. I was hoping to start with a question more on composition. I don't know if you'll go as far as sharing the breakdown between resell and Cohelix.

Frank Takkinen: Great. Thank you for taking the questions, congrats on a solid Q1. I was hoping to start with a question more on composition. I don't know if you'll go as far as sharing the breakdown between RECELL and Cohealyx. If you would, that would be great. If not, maybe a backup question would be just speaking to maybe which one was a stronger driver of growth. Was it a rebound in RECELL or kind of Cohealyx coming up the curve pretty quickly? Thanks.

Speaker #1: And as we do that, that 85% on resell will offset the degradation you get from the other two products. Operating expenses, still very cost disciplined.

Speaker #3: If you would, that would be great. If not, maybe a backup question would be just speaking to maybe which one was a stronger driver of growth?

Speaker #1: we did some restructuring as, as Carrie mentioned. Around the Salesforce last year, about a year from now, our, in 2025. And we took out about two and a half million dollars, not only in sales, but in some other OPEX.

Speaker #3: Was it a rebound in resell or kind of Cohelix coming up the curve pretty quickly? Thanks.

Speaker #4: Yeah. I mean, we're not going to break it out yet, but I mean, it was a combination of the two, Frank. We grew in resell and we grew in Cohelix.

Cary Vance: Yeah, we're not going to break that out yet, but it was a combination of the two, Frank. We grew in RECELL and we grew in Cohealyx. Those are the two main drivers.

Speaker #1: And you can see that that's where we're tracking now. We're at $24.5 million in operating expenses, down significantly from Q1 of 2025, and pretty steady state to Q4 of 2025.

Speaker #4: Those are the two main drivers.

Speaker #3: Okay. That's helpful. In the prepared remarks, I think you made a comment of Q2 sequential growth, continues to be expected. Can you maybe talk to that a little bit more?

Frank Takkinen: Okay. That's helpful. In the prepared remarks, I think you made a comment of Q2 sequential growth continues to be expected. Can you maybe talk to that a little bit more? Obviously, the quarter was a little ahead of where Street expectations were, and understand the appetite to put out expectations you can achieve, but maybe talk through how you guys thought about maybe taking the guide up a little bit, just given how well it seems the recovery is going in Q1.

Speaker #3: And then obviously, the quarter was a little ahead of where street expectations were. And understand the appetite to put out expectations you can achieve.

Speaker #1: we believe that, that OPEX will stay in that range. Don't see that we need to add headcount. we will be opportunistic if, if there's a Salesforce expansion someplace that we need another sales rep. We will do that as long as there's a, as long as there's a business case for adding another one.

Speaker #3: But maybe talk through how you guys thought about maybe taking the guide up a little bit, just given how well it seems the recovery is going in Q1.

Speaker #4: Yeah. I mean, right now, we're sticking with the guidance that but I do think that this is a business that builds on itself. I think a lot of the work that we did, even in the latter part of 2025, brought us the results in Q1.

Cary Vance: Yeah, right now we're sticking with the guidance. I do think that this is a business that builds on itself. I think a lot of the work that we did, even in the latter part of 2025, brought us the results in Q1. I expect that work to continue. There was a lot of good work aside from bringing in orders and revenue. There were a lot of things built. There were hospitals that came out of VAC around Cohealyx, so there's a lot of progress behind the scenes, behind the revenue number. We expect to be able to retain that kind of progress that we had in Q1 into Q2 and capture three months of it as opposed to maybe a month or two of it when we got a new physician or new procedures on board in Q1.

Speaker #1: But we're at a good place from our OPEX, and we don't need to increase that over the next 12 to 18 months. We did talk a little bit about cash.

Speaker #1: It's not on this slide, but I do want to mention it. We have $14.3 million of cash at the end of the quarter. We did burn more cash than we expected in the first quarter.

Speaker #4: And I expect that work to continue. There was a lot of good work aside from bringing in orders and revenue. There were a lot of things built.

Speaker #4: There were hospitals that came out of back around Cohelix. So there's a lot of progress behind the scenes, behind the revenue number. And we expect to be able to retain that kind of progress that we had in Q1 into Q2 and capture three months of it as opposed to maybe a month or two of it when we got new physician or new procedures on board in Q1.

Speaker #1: I had mentioned in February that we expected that we were going to burn more. It was— it was actually more than I thought it was going to be.

Speaker #1: Primarily because of the fact that we had a slow January. And our cash collections are based on, you know, a DSO—a days sales outstanding—of 40 to 45 days.

Speaker #1: And since we don't, we only collect the, say, the first 45, 50 days of the quarter. If we don't have a strong first month, our cash collections are negatively impacted.

Speaker #4: And so we expect that to build on itself, kind of quarter over quarter. That's why we speak to it. In that way. And so more to come in a few months.

Cary Vance: We expect that to build on itself kind of quarter over quarter. That's why we speak to it in that way. More to come in a few months.

Speaker #1: That is going to reverse. In Q2, we're not going to have the one-time compensation cost that we had in the first quarter. And we had very strong revenue in February and March.

Speaker #3: Okay. Helpful. Thank you.

Frank Takkinen: Okay. Helpful. Thank you.

Speaker #2: Thank you.

Speaker #4: Thanks, Frank.

Operator: Thank you.

Cary Vance: Thanks, Frank.

Speaker #2: And the next question will come from Ryan Zimmerman with BTIG. Your line's open.

Operator: The next question will come from Ryan Zimmerman with BTIG. Your line's open.

Speaker #5: Good afternoon, Cary, David, Ben. Thank you for taking the questions and congrats on the progress. Just to put this behind us, Cary, on the MAC dynamics, I appreciate you sharing that the seven MACs are now publishing rates.

Ryan Zimmerman: Good afternoon, Cary, David, Ben. Thank you for taking questions and congrats on the progress. Just to put this behind us, Cary, on the MAC dynamics, I appreciate you sharing that the seven MACs are now publishing rates. I just want to confirm, though, beyond the published rates, the seventh MAC that you were waiting on, everyone is now fully reimbursing for RECELL at this point, correct?

Speaker #1: And the demand and sales activity, activity in April and early May have shown that that momentum is going to continue, which will make our cash receipts for the second quarter reach a point where we will burn significantly less cash than we did in the first quarter.

Speaker #5: I just want to confirm, though, and beyond the published rates, the seventh MAC that you were waiting on, everyone is now fully reimbursing for resell at this point, correct?

Speaker #1: I do want to state that we reinforced our revenue guidance of $80 to $85 million. That's what we had set last, in the first part of the year.

Speaker #4: That's correct. Thanks, Ryan. Thank you, Ryan. So they've all published and there was one MAC that their rates were their rate was below the others that they've brought that rate up in line with everyone else.

Cary Vance: That's correct. Thank you, Ryan. They've all published, and there was 1 MAC that their rate was below the others, that they've brought that rate up in line with everyone else.

Speaker #1: And we're—we restated that guidance at this point. I'll answer some of the other questions during question and answer, but I'll push it back to Carrie for his closing remarks.

Speaker #5: Okay. That's very helpful and really good to hear. As far as and this is just a part of this question that I follow up on BARDA, but just you made some comments about utilization and really smaller burns seeing some adoption.

Ryan Zimmerman: Okay. That's very helpful and really good to hear. As far as, and this is just a part of this question then I have follow-up on BARDA, but just, you made some comments about utilization and really smaller burns seeing some adoption. I'm wondering if you can elaborate on what's driving that. Are you explicitly targeting lower TBSA burns because they're more frequent? It would suggest that doctors are becoming more comfortable, certainly, with the RECELL device if that's the case. I'm wondering if you could kind of speak to that. Like I said, I just have one quick one on BARDA.

Speaker #1: Thank you, David. Again, I just want to reiterate what I feel is important at the company, and that is that we have stabilized things.

Speaker #1: We understand this business. We understand our customers, how they buy, how they use the products. We have a very clear, simple, understandable strategy for growing the business.

Speaker #5: And so I'm wondering if you could elaborate on what's driving that. Are you explicitly targeting lower TBSA burns because they're more frequent? And it would suggest that doctors are becoming more comfortable certainly with the resale device if that's the case.

Speaker #1: And that is that we have a very focused number of accounts: burn centers, level one trauma centers. We have—each of our reps in the U.S., for example—just a few accounts.

Speaker #5: I'm wondering if you could kind of speak to that. And like I said, I just have one quick one on BARDA.

Speaker #1: They're in there every day. They're in the OR. They have relationships—trusted relationships—with physicians. They're selling broader and deeper, so they're getting physicians to use it on different types of cases.

Speaker #4: Sure. So I mean, obviously, we're pushing for them to use it on every wound and every size burn. The question is always with clinicians, is it worth it?

Cary Vance: Sure. Obviously, we're pushing for them to use it on every wound and every size burn. The question is always with clinicians, is it worth it? Is it worth it economically? Is it worth it in terms of the time and the workflow? I think it's a combination of things. I think clinically, we're showing and convincing more that the impact on healing, on pigmentation, is worth it for the patient. I think having an offering of RECELL GO mini that's less expensive, that's really made for smaller wounds, and then the economic impact of length of stay or the advantage to the patient and to the hospital and to really everyone involved for healing faster, I think is just starting to resonate. We're trying to basically cover all our bases in terms of objections or reasons why they may not use it.

Speaker #4: So is it worth it economically? Is it worth it in terms of the time and the workflow? So I think it's a combination of things.

Speaker #1: We're only about 20, 22 percent penetrated in Resell. And that means smaller wounds, and we have Resell Go Mini. We have economic data that should be convincing to these physicians to use it more often.

Speaker #4: I think clinically, we're showing and convincing more that the impact on healing, on pigmentation, is worth it for the patient. I think having an offering of resale go mini for that's less expensive, that's really made for smaller wounds and then the economic impact of length of stay or the advantage to the patient and to the hospital and to really everyone involved for healing faster I think is just starting to resonate.

Speaker #1: We also have physicians that don't use it. And I know, and we know, and we've found out exactly why each one of those doesn't use it.

Speaker #1: And that's where salesmanship starts. You—you go to the reasons why they are objecting to using it, or using it more often, and you address those.

Speaker #1: You address those through education, through peer pressure, through technology, through data, and so we're in the process of doing that. Also, we've got pull-through on Cohelix and Permeaderm.

Speaker #4: And we're trying to basically cover all our bases in terms of objections or reasons why they may not use it. We're trying to address all of those through technology, through data, both economic and clinical.

Speaker #1: So, we have Cohelix One, Permeaderm One, that shows readiness to grafting. Shows economic data that shows cost savings by using the products, and so we'll be pulling through both those products.

Cary Vance: We're trying to address all of those through technology, through data, both economic and clinical.

Speaker #5: Okay. Last one, maybe more for David, but the BARDA contract, I think it's up to 25.5 in revenue, potential revenue. I think three and a half million, if I'm not mistaken, is guaranteed.

Ryan Zimmerman: Okay. Last one, maybe more for David, but the BARDA contract, I think it's up to $25.5 in central revenue. I think three and a half million, if I'm not mistaken, is guaranteed. David, how are you thinking about that coming through, when it comes through? Any guidance would certainly be helpful there. Appreciate it. Thanks for taking the question.

Speaker #1: While we're expanding resell, and we will be, like I said, growing quarter over quarter—predictably and substantially—which should be, I think, comforting and exciting to investors going forward.

Speaker #5: So David, how are you thinking about that coming through when it comes through any guidance would certainly be helpful there. Appreciate it. Thanks for sharing the question.

Speaker #1: And so with that, let me turn it over to Ben to take questions, and we're happy to answer them. Great. Thank you, Carrie.

Speaker #4: Sure. Sure, Ryan. Good to hear from you. And thanks for the question. What's guaranteed is around 3.9 million, over 10 years. And that is basically amortized per month over those 10 years.

David O'Toole: Sure. Ryan, good to hear from you. Thanks for the question. What's guaranteed is around $3.9 million over 10 years. That is basically amortized per month over those 10 years. You can pretty much assume that it's going to be about $100,000 per quarter, $30,000 or so per month. It is billed on a monthly basis, so that cash comes in during that 10-year period. The rest of it is only if there's a mass casualty. What we're required to do is to have safety stock. We're required to have stock on hand, but it basically equates to our safety stock anyway. It's not an increase, and I've been asked this question before, and I'll just tell you, it's not an increase in cost to have that safety stock that fulfills our requirements for BARDA.

Speaker #1: Hope everyone can hear me all right. It's great to be here—great to be with all of you on the line. We've had a number of questions submitted to us in advance.

Speaker #1: And I'm going to go through these questions in order. And I will read them out as they have been submitted to us. So, Carrie, I'll put the first question to you.

Speaker #4: So you can pretty much assume that it's going to be about 100,000 dollars per quarter. 30 or so thousand per month. And it is billed on a monthly basis.

Speaker #1: Could you help us understand who the primary customer is for the Resell Suite of products in the US market, and how that shapes the commercial growth opportunity?

Speaker #4: So that cash comes in during that 10-year period. The rest of it is only if there's a mass casualty. And what we're required to do is to have safety stock.

Speaker #1: Sure, thanks, Ben. And I just kind of mentioned that, but you know, first of all, I want all of you to know I've spent a lot of time in hospitals—as a salesman, as a sales manager, as an executive—over the years.

Speaker #4: We're required to have stock on hand. But it basically equates to our safety stock anyway. So it's not an increase and I've been asked this question before, and I'll just tell you, it's not an increase in cost to have that safety stock that fulfills our requirements for BARDA.

Speaker #1: So I understand hospitals, how they work, what, what, what pain points there are, what, what drives behavior, number one. Number two, I've spent a good amount of time over the last six months in hospitals with our reps, with our customers, understanding the workflow, understanding their, you know, transparent feedback about why they like it, you know, what impediments there are, and so on.

Speaker #5: Appreciate it. Thank you.

Josh Jennings: Appreciate it. Thank you.

Speaker #4: Thanks, Ryan.

Cary Vance: Thanks, Ryan.

Speaker #2: Thank you. And the next question is going to come from Chris Kallos with MST Financial. Your line's open.

Operator: Thank you. The next question's going to come from Chris Kallos with MST Financial. Your line's open.

Speaker #6: Thank you, Thanh. Thank you for taking my question. Hi, Cary. Hi, David. Just a quick question. Regarding the guidance, in terms of the multiple moving parts now with the product mix, what would be the drivers that you'd be looking for to maybe for us to expect the company coming at the high end of guidance for the year?

Chris Kallos: Thank you. Thank you for taking my question. Hi, Cary. Hi, David. Just a quick question. Regarding the guidance, in terms of the multiple moving parts now with the product mix, what would be the drivers that you'd be looking for to maybe, for us to expect the company coming at the high end of guidance for the year? In light of the Cohealyx data and the rest, what should we be aware of?

Speaker #1: And so, those people that we sell to are, you know, number one, I think, clinically, trauma surgeons, burn surgeons, and their staff. The staff's really important from a workflow perspective.

Speaker #1: And getting them on board, and getting them trained, and creating awareness. But there's also the department directors that, again, understand the logistics of it and the financials of it.

Speaker #1: You know, you have buyers, you have administration. So we, we, we talk to all of those people because they're all involved in the decision-making.

Speaker #6: What in light of the Cohelix data and the rest, what should we be aware of?

Speaker #4: Yeah. I mean, I think we have thank you, Chris. Good to hear from you. I think we've got one quarter under us, right? And so I think while I and the team have a good sense of confidence, me six months into the role, where we stand, what we know, how what we're doing is impacting the market and the number, it's still just a quarter.

Speaker #1: The clinical decision, the economic decision, of the products that they use. And so, understanding who those champions are, understanding who makes the decisions in an account is extremely important.

Cary Vance: Thank you, Chris. Good to hear from you. I think we've got one quarter under us, right? I think while I and the team have a good sense of confidence, me, six months into the role, where we stand, what we know, how what we're doing is impacting the market and the number, it's still just a quarter. I think for us, it's a matter of seeing the progress throughout the course of the year. That'll give us a better level of confidence and insight into where we would expect to finish the year. My expectation is we're going to be as transparent as we can be about how we're progressing and what we expect, and that we'll report out accordingly.

Speaker #1: And so, those are the people that we talk to every day. And those are the people we need to understand if we're really going to make a difference.

Speaker #4: And I think for us, it's a matter of seeing the progress throughout the course of the year. That'll give us a of confidence insight into where we would expect to finish the year.

Speaker #1: Coming to the second question, which actually is really three questions in one, relating firstly to revenue by product, second to utilization, and third related to data in relation to our pricing.

Speaker #4: And my expectation is we're going to be as transparent as we can be about how we're progressing and what we expect and that we'll report out accordingly.

Speaker #1: But I'll start with the first part, which is on revenue by product. Would the company consider breaking out revenue by product segment, so investors can better track which products are gaining traction?

Speaker #1: Yeah, I think at some point we will. I think, number one, the amount of revenue from that product needs to become a material amount to make it worth doing.

Speaker #6: Great. And just to follow up question regarding the smaller purchases that are coming through at the moment, can you maybe relate that to has that been a result of a change in strategy in the sales team and/or headcount, maybe a comment on that?

Chris Kallos: Great. Just a follow-up question regarding the smaller purchases that are coming through at the moment. Can you maybe relate that to, has that been a result of a change in strategy in the sales team and/or headcount? Maybe a comment on that.

Speaker #1: I think that'll come in, in the quarters ahead. So, you know, more to come on that. And then, just quite transparently, you know, we need to understand more about it too.

Speaker #4: Sure. I think we want customers to order in a way that is convenient for them. In terms of how much they stock, in terms of how often they use it, we're responding to them.

Cary Vance: Sure. I think we want customers to order in a way that is convenient for them, in terms of how much they stock, in terms of how often they use it. We're responding to them. I think we want to make sure we're not pushing any of our own agenda about wanting any larger orders. That doesn't really help us even things out. What I like from the AVITA side of this is, it becomes very consistent and very predictable. I think as we go through weekly regular forecasting exercises, we're becoming very good at understanding how our customers buy and predicting how they will buy in the coming weeks and months of a quarter. Again, we would not do it that way if our customers didn't want it that way.

Speaker #1: So, for example, with Cohelix, we have, you know, products that have gone through VAC. They've come out of VAC. They—that kind of gives us the opportunity to compete.

Speaker #4: I think we want to make sure we're not pushing any of our own agenda about wanting any larger orders or that doesn't really help us.

Speaker #1: And so we have to get on contract. Once we're on contract, we have to get them to use our product more than the other products.

Speaker #4: Even things out, what I like from the Avita side of this is it becomes very predictable. And I think as we go through weekly, regular forecasting exercises, we're becoming very good at understanding how our customers buy and predicting how they will buy.

Speaker #1: And so, you know, one quarter in, two quarters in, seeing that change from quarter to quarter—you know, every week I go through the forecasting.

Speaker #1: We do account by account, by region, by territory. Who's buying what? What's in the funnel around Cohelix? What's coming out of VAC?

Speaker #1: How much are they going to buy? All of that. So we're internally in that. And so, my comfort level with understanding it perfectly, I wouldn't be credible.

Speaker #4: In the coming weeks and months of a quarter, and again, we would not do it that way if our customers didn't want it that way.

Speaker #4: So it's really a combination of giving them, letting them order the way they want to order, and use it, and us having a mechanism and a process that helps us be very predictable.

Cary Vance: It's really a combination of letting them order the way they want to order and use it, and us having a mechanism and a process that helps us be very predictable.

Speaker #1: We continue to understand Cohelix, understand how they're buying it, where they're using it, and where we expect them to use it. And so, in subsequent quarters, when the revenue becomes more material and when we understand it, we can consistently communicate that to you—about how it's progressing, how people are using it, and how we expect it to continue to climb.

Speaker #6: Thank you for that. And just one last question for David. David, in terms of cost outs, have we reduced the costs as much as possible?

Chris Kallos: Thank you for that. Just one last question for David. David, in terms of cost outs, have we reduced the cost as much as possible? Should we sort of expect the cost line to stay stable from here on?

Speaker #6: Should we sort of expect the cost line to stay stable from here on?

Speaker #1: I mean, just generally, we plan on that number going up. But the precision at which we can predict that and communicate that will be better in subsequent quarters.

Speaker #4: Yeah. I think you have to look at it that we've stabilized the cost structure. And I've talked about this previously. The one variable that I hope goes up is commissions.

David O'Toole: Yeah, I think you have to look at it that we've stabilized the cost structure. I've talked about this previously. The one variable that I hope goes up is commissions, because that's the one that will be an indicator that we're having more revenue. From a G&A and an R&D and headcount perspective, our cost structure is where we want it to be.

Speaker #1: So that's the long way of saying not yet. Related to that, does that plan also include disclosing procedure volume data over time? Yeah, I, I don't think we won't get into procedure volumes.

Speaker #4: Because that's the one that will drive it will be an indicator that we're having more revenue. But from a G&A and an R&D and headcount perspective, our cost structure is where we want it to be.

Speaker #1: I mean, I know what they are. And, you know, one of the corporate goals that we have, and one of the internal strategies and things that we talk about every week, is utilization.

Speaker #6: Great. That's all I had. Thanks very much.

Chris Kallos: Great. That's all I had. Thanks very much.

Speaker #1: So, what happens before revenue is utilization. We want everybody to use the products, and the revenue will follow. And so, what we track is, you know, which physicians are using which products, and for what types of procedures, what types of wounds.

Speaker #4: Thanks, Chris.

Cary Vance: Thanks, Chris.

Speaker #2: And as a reminder to ask a question, please press star 11 on your telephone. The next question comes from Josh Jennings of TDCO, and your line's

Operator: As a reminder, to ask a question, please press star one one on your telephone. The next question comes from Josh Jennings of TD Cowen. Your line's open.

Speaker #6: Hi. Good afternoon. Thanks for taking the questions. And congratulations again, Cary, on getting the interim tag removed from your CEO title. I was hoping to just start off I mean, I know they had a couple of questions on Mac, and you described the progress of seven Macs publishing.

Josh Jennings: Hi, good afternoon. Thanks for taking the questions and congratulations again, Cary, on getting the interim tag removed from your CEO title. I was hoping to just start off, I know that you had a couple questions on MAC and you described the progress of 7 MACs publishing. Can you help us just think about this physician confidence and/or burn center confidence in terms of getting reimbursed for RECELL, where we are there? I think we're 50% to 75% back. I know you're banking on continued progress, sequential growth over the course of this year, but maybe just help us think through where you are in that recovery and on the physician and center confidence front that they'll get reimbursed.

Speaker #1: You know, how many kits did they use? How much—how large was the total body surface area burned, for example? And so that's some—that's an internal metric that we, kind of by account, by physician, that we track and we push and we drive.

Speaker #6: Can you help us just think about this physician confidence and/or center burn center confidence in terms of getting reimbursed for resell where we are there?

Speaker #1: And we use modeling. We don't just use the reps and their relationships and their communication. We also use modeling tools. Through our sales operations team, we use, which incorporates AI as well, to understand where the business is, where they should be focused, how they should be expanding, what we're missing.

Speaker #6: I mean, I think we're 50 to 75 percent back. I know you're banking on continued progress sequential growth over the course of this year.

Speaker #6: But maybe just help us think through where you are in that recovery and on the physician and center confidence front that they'll get reimbursed.

Speaker #1: So I think investors can rest assured that we are driving that type of thing internally, that these are key, key KPIs for us. But at least in the near term, we're just, we're not sharing procedure data.

Speaker #4: Yeah. I'd say 75 is probably a good number. And as we've talked over the last three, five months, I've kind of said that's the way it's going to be.

Cary Vance: Yeah, I'd say 75 is probably a good number, and as we've talked over the last three, five months, I've said that's the way it's going to be. There's the official MAC situation, and then there's an education and communication that needs to take place to make sure that we're back to where we were over a year ago. I think that some of it is that, and then some of it is right now we're in a kind of blocking and tackling mode, healthcare system by healthcare system or hospital by hospital, where they have their own internal communication about what's getting reimbursed and how to get reimbursed, and so we're just trying to help with the education of all that. Something we probably would've been doing more of a year ago had this MAC issue not come up. All right?

Speaker #4: There's the official Mac situation, and then there's an education and communication, and then these take place to make sure that we're back to where we were over a year ago.

Speaker #1: Externally, the final positive question was: Given that studies demonstrate meaningful cost savings and superior patient outcomes, does that give a boost to pricing power in negotiations with hospitals and payers?

Speaker #4: I think that some of it is that, and then some of it is right now we're in a kind of blocking and tackling mode healthcare system by healthcare system or hospital by hospital where they have their own they have their own internal communication about what's getting reimbursed and how to get reimbursed.

Speaker #1: Yeah, I mean, whenever you look at competing and competitive advantage, or powerful data, how do you use that? You use that to get market penetration.

Speaker #4: And so we're just trying to help with the education of all that. Something we probably would have been doing more of a year ago had this Mac issue not come up, all right?

Speaker #1: You use that to get a higher demand, and if you can get price, you get price. I mean, we take price every time we can.

Speaker #1: In any product line, you balance that with the ability to penetrate from a market perspective, considering what the competition is and what the value prop is.

Speaker #4: So now after the fact that that is kind of officially cleared up, now we kind of go hospital by hospital with our healthcare access team along with our commercial teams and make sure they understand how they get paid and how to work through the process.

Cary Vance: Now after the fact that that is kind of officially cleared up, now we go hospital by hospital with our healthcare access team, along with our commercial teams, and make sure they understand how they get paid and how to work through the process.

Speaker #1: So if you're more expensive, but you're more valuable, you can get away with that. Of course, all of those dynamics and price elasticity—and we look at that every day.

Speaker #1: And, you know, we're early days here. So, while we have really valuable data that we think will help us in the marketplace, we have to decide on a regular basis, especially in these early days, how much price we can take, how much market penetration that will give us, along with the data. We're the new guys on the block in dermal matrix, for example. We're the small guys.

Speaker #6: Thanks for that. And just coming out of ABA with the Cohelix update, I was hoping and clearly there's more buzz around that product, but I was hoping you could just maybe put a finer point on what you're seeing in terms of traction still early days post-ABA but any surge in feedback.

Josh Jennings: Thanks for that. Just coming out of ABA with the Cohealyx update, clearly there's more buzz around that product, but I was hoping you could just maybe put a finer point on what you're seeing in terms of traction. Still early days post ABA, but any surgeon feedback. If you could give us any just updates on the number of centers that are starting to use the entire portfolio, Cohealyx, and PermeaDerm, and seeing some of the initial traction of the portfolio build-out. Thanks for taking all the questions.

Speaker #6: And then also if you could give us any just updates on the number of centers that are starting to use the entire portfolio resell Cohelix and Permeaderm and seeing some of the initial traction of the portfolio build-out.

Speaker #1: And so you balance all of that, the relationships we have. We also have relationships with resell, and we leverage that. So yes, we—we look at pricing.

Speaker #1: We will take pricing any and every day we can, but there are a lot of other things to balance in the competitive framework that we have on a regular basis, especially in the early days.

Speaker #6: Thanks for taking all the questions.

Speaker #4: Sure. I'll answer the second one first. So I think we're in the 20s. In terms of centers that are using all three products, I think, again, if you haven't had a chance on our website, there's a great webinar we did during ABA where it was me and Katie Dr. Katie Bush as well as two of our physicians.

Cary Vance: Sure. I'll answer the second one first. I think we're in the 20s, in terms of centers that are using all three products. I think, again, if you haven't had a chance on our website, there was a great webinar we did during ABA, where it was me and Dr. Katie Bush, as well as two of our physicians, and they spoke way better than we could about the day-to-day use, utilization, and workflow of Cohealyx and PermeaDerm, as well as the study and some of those results, because both those things matter. Obviously, data matters, but so does the day in, day out and just the credibility that they have. I encourage you all to go back and listen to that if you haven't already.

Speaker #1: So, it's a great point to bring up. There's no doubt that we want to expand our margins if we can. But we also want to expand our growth.

Speaker #1: We want to expand our market share, and so we'll balance all those things going forward. Going to a slightly separate topic now on the MAX.

Speaker #4: And they spoke way better than we could about the day-to-day use utilization and workflow of Cohelix and Permeaderm as well as the study and some of those results because both those things matter.

Speaker #1: Now that all seven MACs have published payment rates, are there still any historical unpaid or disputed claims that are sitting with the hospitals? And what visibility do you have into those being cleared?

Speaker #4: Obviously, data matters, but so does the day-in-day-out and just the credibility that they have and I encourage you all to go back and listen to that if you haven't already.

Speaker #1: And what is the company doing to support hospitals through that process? Sure. So, I mean, we help where we can, because we have field-based healthcare economics market access people that communicate with hospitals directly—with the coders, with administration, and with the physicians—to help make sure that they're coding properly, that they get paid.

Speaker #4: But I think that there's a substantial amount of buzz that comes out of ABA and the study itself and the preliminary release I think it helps us in our back committees with a little bit of acceleration that's just a gut feel that feeding them better and more information as they're in the process is going to help get it out of there sooner.

Cary Vance: I think that there's a substantial amount of buzz that comes out of ABA and the study itself and the preliminary release. I think it helps us in our VAC committees with a little bit of acceleration. That's just a gut feel that feeding them better and more information as they're in process is going to help get it out of there sooner. We just want to compete. I think that Cohealyx competes very well with other dermal matrices. I think we have some advantages as well, and we just want to get out there and do that. In order to do that, this data will help quite a bit, as will us just practically getting out of VAC and having more people use it and give us their input and be reference sites for others to understand the advantage of using Cohealyx.

Speaker #1: And we have to be kind of arm's length, but we have to educate wherever we can. In terms of them getting back payments, and adjudicating past claims, the anecdotal data that we get is that they are being cleared up.

Speaker #4: We just want to compete. I think that Cohelix competes very well with other dermal matrices. I think we have some advantages as well. And we just want to get out there and do that.

Speaker #1: They are getting paid, but we're not really involved in that other than, again, educating them and making sure they have the proper codes. So, we're not directly involved, but we do support them however we can.

Speaker #4: But in order to do that, this data will help quite a bit as will us just practically getting out of back and having more people use it and give us their input and be reference sites for others to understand the advantage of using Cohelix.

Speaker #1: And then, the information we get back is that those things are being handled retroactively. A positive question, initially on Cohelix, and then in a moment we'll get to the financial position.

Speaker #4: And so I think it's palpable. And it's exciting. And I'm looking forward to the months ahead as I would expect to see 12 to 15 VACs be Cohelix come out at 12 to 15 VACs every quarter.

Cary Vance: I think, it's palpable, and it's exciting, and I'm looking forward to the months ahead. I would expect to see Cohealyx come out at 12 to 15 VACS every quarter. That's about what it was last quarter. That's another expectation I have this quarter, and I expect that to continue. We still have about 55 to 60 of them in VACS. Every time we get some of them out, some more go back in, which is great, because at some point, we're going to be covered across all the burn centers and the level 1 trauma centers, we're going to be clear to compete in every one of them.

Speaker #1: And a question for David. But before we get there, on the Cohelix and the VAC process, what's the approximately 200 target centers? How many have Cohelix gone through the Value Analysis Committee process so far?

Speaker #1: And what proportion are currently being served? And, in addition to that, how does the total addressable opportunity compare to where things stood in November of 2025?

Speaker #4: That's about what it was last quarter. That's another expectation to have this quarter. And I expect that to continue. We still have about 55 to 60 of them in VACs.

Speaker #4: Every time we get some of them out, some more go back in, which is great because at some point, we're going to be covered across all the burn centers and the level one trauma centers and we're going to be clear to compete in every one of them.

Speaker #1: Related to cohelix. Yeah. so first of all, the, the, the TAM or total addressable market in cohelix is, is, is unchanged from, from November.

Speaker #1: We continue to assess that as we, as it, as we move along. So we'll continue to assess that and update that up or down, wherever.

Speaker #2: Thank you. And I'm showing no further questions in the queue at this time. I will now turn the call back over to Cary for closing remarks.

Operator: Thank you. I'm showing no further questions in the queue at this time. I will now turn the call back over to Cary for closing remarks.

Speaker #1: We want to make sure we're accurate. We're not just throwing numbers out there. In terms of Cohelix and VACs, and progress of the 200, let's say there's about 56 in VAC right now; about 33 have come out of VAC.

Speaker #4: Thank you, Operator. And thank you to everyone for your time and support today. We look forward to continued engagement and discussions with all of you in the coming days and weeks.

Cary Vance: Thank you, operator. Thank you to everyone for your time and support today. We look forward to continued engagement and discussions with all of you in the coming days and weeks, and we look forward to another great quarter. Thanks, everyone.

Speaker #1: And so, you probably have a little bit more than the 33 that, even though they're in VAC, they're buying evaluation product and so on.

Speaker #4: And we look forward to another great quarter. Thanks, everyone.

Speaker #1: So, it's a really good flow. We have 50—we have, we have—it's a really good pipeline. We have 56; we've had 56 pretty much for the last nine months, but it's not the same 56.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.

Speaker #1: So every time, 12 to 15 of them. Stable. The one variable is commissions expense, and if commissions or expense go up, then obviously our revenue is going to go up also.

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