Q2 2026 AVITA Medical Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the AVITA Medical, Inc. Second Quarter 2026 Earnings Conference Call. 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 will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ben Atkins, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your speaker today, Ben Atkins, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Speaker #2: Thank you, operator. Welcome to AVITA Medical's second quarter 2026 earnings call. Joining me on today’s call are Carrie Vance, President and Chief Executive Officer, and David O'Toole, Chief Financial Officer.

Ben Atkins: Thank you, operator. Welcome to AVITA Medical's second quarter 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 descriptions 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 Carrie.

Speaker #3: Good afternoon in the U.S. and good morning in Australia. Thank you for joining us. As you saw in our press release today, we delivered strong revenue growth in the second quarter of 21.7 million dollars, up 18% year over year, and 13% sequentially.

Cary Vance: Good afternoon in the US and good morning in Australia. Thank you for joining us. As you saw in our press release today, we delivered strong revenue growth in the second quarter of $21.7 million, up 18% year over year and 13% sequentially. As AVITA continues to expand in the US and build its presence in key international markets, our results reflect the growing utility of our acute wound care portfolio, led by RECELL and supported by Cohealyx and PermeaDerm. In the US, RECELL generated $18.5 million in revenue during the second quarter, growing approximately 13% sequentially from the prior quarter. This growth reflected physician utilization following physician reimbursement stabilization, together with increasing adoption of RECELL GO mini, which continues expanding use in smaller wounds. I'll add a little more color on RECELL later in my remarks. Internationally, revenue from RECELL increased approximately 26% sequentially over the Q1.

Speaker #3: As AVITA continues to expand in the U.S. and build its presence in key international markets, our results reflect the growing utility of our acute wound care portfolio, led by RECELL and supported by COHÉLIX and PermaDerm.

Speaker #3: In the U.S., Resell generated $18.5 million in revenue during the second quarter, growing approximately 13% sequentially from the prior quarter. This growth reflected physician utilization following physician reimbursement stabilization, together with increasing adoption of Resell Go Mini, which continues expanding use in smaller wounds.

Speaker #3: I'll add a little more color on Resell later in my remarks. Internationally, revenue from Resell increased approximately 26% sequentially over the first quarter. We continue to commercialize Resell Go following regulatory authorizations in Europe, the U.K., Australia, and New Zealand.

Cary Vance: We continue to commercialize RECELL GO following regulatory authorizations in Europe, the UK, Australia, and New Zealand. As adoption builds, clinicians are also beginning to share their early clinical experience. During the quarter, the British Burn Association annual meeting featured the first UK clinical experience with RECELL GO, reporting successful treatment of 17 patients while highlighting improved operating room workflow. While international revenue remains a smaller contributor today, these milestones continue building the foundation for long-term growth alongside our large US opportunity. Cohealyx generated $1.7 million, representing approximately 16% sequential growth. We're encouraged by the steady progress we're seeing as hospitals complete their value analysis committee, or VAC reviews, and begin incorporating Cohealyx into clinical practice. We continue to maintain a healthy pipeline of approximately 55 active VAC reviews, with 10 to 15 reviews typically completed each quarter, driving a steady increase in ordering accounts.

Speaker #3: As adoption builds, clinicians are also beginning to share their early clinical experience. During the quarter, the British Burn Association annual meeting featured the first U.K.

Speaker #3: clinical experience with Resell Go, reporting successful treatment of 17 patients all highlighting improved operating room workflow. While international revenue remains a smaller contributor today, these milestones continue building the foundation for long-term growth alongside our large U.S.

Speaker #3: opportunity. Cohelix generated 1.7 million dollars, representing approximately 16% sequential growth. We're encouraged by the steady progress we're seeing as hospitals complete their value analysis committee or VAC reviews and begin incorporating Cohelix into clinical practice.

Speaker #3: We continue to maintain a healthy pipeline of approximately 55 active VAC reviews, with 10 to 15 reviews typically completed each quarter. Driving a steady increase in ordering accounts.

Cary Vance: The interim Cohealyx-I clinical data presented earlier this year supports those dynamics by providing hospitals and surgeons with comparative clinical evidence. The study demonstrated substantial faster time to skin graft readiness compared with leading dermal matrices, and later this year, we expect to submit the complete six-month follow-up dataset for publication, providing additional evidence of long-term durability. PermeaDerm generated $600,000 in revenue during the quarter. Commercial adoption remains in its early stages. We're encouraged by the initial response following our recent positioning of PermeaDerm as a wound temporizer, providing clinicians with an alternative to allograft to temporarily stabilize and protect the wound before definitive closure. To further support that positioning, we expect results from our PermeaDerm I clinical study later this year. As a reminder, this post-market study evaluated PermeaDerm as a clinically comparable lower-cost alternative to allograft. Today, 25 hospitals have experience using all three AVITA products.

Speaker #3: interim Cohelix One clinical data presented earlier this year supports those dynamics by providing hospitals and surgeons with comparative clinical evidence. The study demonstrated substantial faster time-to-skin graft readiness compared with leading dermal matrices, and later this year we expect to submit the The complete six-month follow-up dataset for publication, providing additional evidence of long-term durability.

Speaker #3: Permeterm generated 600,000 dollars in revenue during the quarter. Commercial adoption remains in its early stages. We're encouraged by the initial response following our recent positioning of Permeterm as a wound temporizer, providing clinicians with an alternative to allograft to temporarily stabilize and protect the wound before definitive closure.

Speaker #3: To further support that positioning, we expect results from our Permeterm One clinical study later this year. As a reminder, this post-market study evaluated Permeterm as a clinically comparable, lower-cost alternative to allograft.

Speaker #3: Today, 25 hospitals have experienced using all three AVITA products. Some are already regularly incorporating the full portfolio into clinical practice, while others are still evaluating where each product best fits within their treatment pathway.

Cary Vance: Some are already regularly incorporating the full portfolio into clinical practice, while others are still evaluating where each product best fits within their treatment pathway. That's what we'd expect at this stage of adoption of our new products, and it gives us confidence in the opportunity to grow utilization of our full portfolio within our accounts. Since becoming CEO last October, my objective has been straightforward: to build a business that consistently delivers growth quarter-over-quarter, year-over-year through disciplined commercial execution. Looking back over H1 of 2026, I believe we've demonstrated that objective in action. We've delivered consecutive quarters of sequential growth, broadened adoption across our portfolio, and we continue to improve the financial profile of the company. That progress gives us greater confidence in where the business is headed, and today we're updating our outlook accordingly.

Speaker #3: That's what we'd expect at this stage of adoption of our new products, and it gives us confidence in the opportunity to grow utilization of our full portfolio within our accounts.

Speaker #3: Since becoming CEO last October, my objective has been straightforward: to build a business that consistently delivers growth quarter over quarter, year over year, through disciplined commercial execution.

Speaker #3: Looking back over the first half of 2026, I believe we've demonstrated that objective in action. We've delivered consecutive quarters of sequential growth, broadened adoption across our portfolio, and we continue to improve the financial profile of the company.

Speaker #3: That progress gives us greater confidence in where the business is headed, and today we're updating our outlook accordingly. First, we're raising our full year 2026 revenue guidance to a range of $86 million to $89 million, representing growth of 20% to 24% over 2025.

Cary Vance: First, we're raising our full year 2026 revenue guidance to a range of $86 million to $89 million, representing growth of 20% to 24% over 2025. Second, we're introducing new guidance to achieve cash flow breakeven and begin generating cash during Q4 of 2026. Reaching that milestone is an important step in AVITA's evolution. It reflects not only stronger revenue growth, but also the operating discipline and cash generation that David will discuss in more detail.

Speaker #3: Second, we're introducing new guidance to achieve cash flow break-even and begin generating cash during the fourth quarter of 2026. Reaching that milestone is an important step in AVITA's evolution.

Speaker #3: It reflects not only stronger revenue growth, but also the operating discipline and cash generation that David will discuss in more detail.

Speaker #2: Thank you, Carrie. Good afternoon, and in Australia, good morning. I will use my prepared remarks to look at how our strong commercial performance is flowing through the business.

David O'Toole: Thank you, Kerry. Good afternoon, and in Australia, good morning. I will use my prepared remarks to look at how our strong commercial performance is flowing through the business, particularly across operating leverage, cash generation, and our path to cash flow breakeven. Turning to the financials on slide four, let me start with revenue. As Kerry indicated, revenue increased approximately 18% year over year and 13% sequentially from Q1 to $21.7 million, crossing over $20 million in revenue for a quarter for the first time in our company history. With this sequential revenue growth for Q2 and $41 million in revenue for H1 of 2026, we are increasing our revenue guidance for 2026 from $80 million to $85 million to now $86 million to $89 million.

Speaker #2: Particularly, across operating leverage, cash generation, and our path to cash flow break-even. Turning to the financials on slide 4, let me start with revenue.

Speaker #2: As Carrie indicated, revenue increased approximately 18% year over year, and 13% sequentially from the first quarter, to $21.7 million—crossing over $20 million in revenue for a quarter for the first time in our company history.

Speaker #2: With this sequential revenue growth for the second quarter, and 41 million in revenue for the first six months of 2026, we are increasing our revenue guidance for 2026 from 80 million to 85 million, to now 86 million to 89 million.

Speaker #2: This will represent growth for this year from the 71.6 million in revenue in 2025, in a range of approximately 20% to 24%. Turning to gross margin, gross margin increased to 81.9% compared to 81.2% in the prior year quarter.

David O'Toole: This will represent growth for this year from the $71.6 million in revenue in 2025 in a range of approximately 20% to 24%. Turning to gross margin. Gross margin increased to 81.9% compared to 81.2% in the prior year quarter and remained above 81% year to date despite continued growth in our newer products. As we've discussed previously, while changes in product mix modestly impact reported gross margin percentage, Cohealyx and PermeaDerm contribute incremental gross profit without a proportional increase in operating expenses. RECELL gross margin remains strong at approximately 86%. RECELL growth provides a tailwind for reported gross margin that offsets the impact of product mix as Cohealyx and PermeaDerm become a larger part of the business. Looking at operating expenses. Operating expenses were $24.6 million, essentially no change to Q1, and approximately 6% lower than in the same period in 2025.

Speaker #2: And remained above 81% year to date despite continued growth in our newer products. As we've discussed previously, while changes in product mix modestly impact reported gross margin percentage, Cohelix and Permeterm contribute incremental gross profit without a proportional increase in operating expenses.

Speaker #2: Resale gross margin remained strong at approximately 86%. Resale growth provides a tailwind for reported gross margin that offsets the impact of product mix as Cohelix and Permeterm become a larger part of the business.

Speaker #2: Now looking at operating expenses. Operating expenses were 24.6 million, essentially no change to the first quarter, at approximately 6% lower than in the same period in 2025.

David O'Toole: Importantly, this demonstrates the benefit of the commercial operating structure we established during Q2 of 2025, capable of supporting continued commercial growth without requiring a corresponding increase in operating expenses. Looking ahead for the rest of 2026, we continue to identify opportunities to further reduce operating expenses while continuing to support our commercial priorities. This quarter, operating loss and net loss improved to $6.9 million and $7.7 million respectively, compared to $11.1 million and $9.9 million respectively in the same period last year. The Q2 operating and net loss showed significant improvements from the quarterly losses we have generated in the past. Turning to cash, which remains one of our highest priorities. As we discussed during our Q1 call, we expected cash use to improve significantly during Q2 as seasonal payments normalized, collections improved, and revenue continued to scale. That's exactly what happened.

Speaker #2: Importantly, this demonstrates the benefit of the commercial operating structure we established during the second quarter of 2025, which is capable of supporting continued commercial growth without requiring a corresponding increase in operating expenses.

Speaker #2: Looking ahead for the rest of 2026, we continue to identify opportunities to further reduce operating expenses while continuing to support our commercial priorities. This quarter, operating loss and net loss improved to 6.9 million, and 7.7 million respectively.

Speaker #2: Compared to $11.1 million and $9.9 million, respectively, in the same period last year. The second quarter operating and net loss showed significant improvements from the quarterly losses we have generated in the past.

Speaker #2: Turning to cash, which remains one of our highest priorities, as we discussed during our first quarter call, we expected cash use to improve significantly during the second quarter as seasonal payments normalized, collections improved, and revenue continued to scale.

Speaker #2: That's exactly what happened. Net cash use improved to approximately 3.2 million during the quarter, representing a major improvement from the first quarter, and from the quarterly cash burn each quarter last year.

David O'Toole: Net cash use improved to approximately $3.2 million during the quarter, representing a major improvement from Q1 and from the quarterly cash burn each quarter last year. We ended the quarter with approximately $11.1 million in cash equivalent, and market securities. As I look at the trajectory of our numbers indicated in the green boxes on this slide, I see a financial model performing as expected and in alignment with our growing revenue. As Kerry mentioned earlier, we are also introducing new guidance for our cash flow outlook. That confidence of reaching cash flow breakeven is supported by three financial trends that are now working together, illustrated here on slide five. First, revenue continues to scale. We've now delivered two consecutive quarters of meaningful sequential growth, 9.7% and 13% respectively, and we've raised our full year revenue guidance.

Speaker #2: We ended the quarter with approximately $11.1 million in cash, cash equivalents, and marketable securities. As I look at the trajectory of our numbers, indicated in the green boxes on this slide, I see a financial model performing as expected and in alignment with our growing revenue.

Speaker #2: As Carrie mentioned earlier, we are also introducing new guidance for our cash flow outlook. That confidence of reaching cash flow break-even is supported by three financial trends that are now working together, illustrated here on slide 5.

Speaker #2: First, scale. We've now delivered two consecutive quarters of meaningful sequential growth, 9.7% and 13% respectively. And we've raised our full year revenue guidance. Second, we've maintained high gross margin above 81%, while growing our portfolio over multiple quarters.

David O'Toole: Second, we've maintained high gross margin above 81% while growing our portfolio over multiple quarters. Third, we've maintained disciplined control of OpEx and optimized our cash conversion cycle. Essentially, we are spending less money to run the business and collecting cash faster from our operations. Taken together, those trends give us increasing confidence that AVITA is approaching an important financial inflection point. As the business continues to scale, we expect a further reduction in cash use during Q3 before achieving cash flow breakeven and beginning to generate cash during Q4 of 2026. Turning to slide six, our updated outlook reinforces our confidence that the balance sheet remains aligned with the next phase of the company's growth and funded through this transition to cash generation.

Speaker #2: Third, we've maintained discipline control of operating expenses and optimized our cash conversion cycle. Essentially, we are spending less money to run the business, and collecting cash faster from our operations.

Speaker #2: Taken together, those trends give us increasing confidence that AVITA is approaching an important financial inflection point. As the business continues to scale, we expect a further reduction in cash use during the third quarter, before achieving cash flow break-even and beginning to generate cash during the fourth quarter of 2026.

Speaker #2: Turning to slide 6, our updated outlook reinforces our confidence that the balance sheet remains aligned with the next phase of the company's growth and is funded through this transition to cash generation.

Speaker #2: We continue to operate well within the requirements of our credit facility, which was intentionally structured to support the business through this stage of commercial expansion.

David O'Toole: We continue to operate well within the requirements of our credit facility, which was intentionally structured to support the business through this stage of commercial expansion. As revenue continues to build, the Perceptive Advisors debt facility also provides access to an additional $10 million tranche once trailing 12-month revenue reaches $85 million, providing additional financial flexibility as we transition towards cash generation. In summary, we're delivering commercial growth, maintaining strong gross margin, exercising control of OpEx, and significantly reducing our use of cash. Together, those trends support our confidence in the increased revenue forecast we share today and our path towards cash generation. Today's results also reflect strong execution across the organization. Commercial operations and corporate teams have worked together exceptionally well to scale the business while maintaining financial discipline. I'd like to thank everyone across AVITA for their commitment and execution during H1.

Speaker #2: As revenue continues to build, the perceptive debt facility also provides access to an additional 10 million tranche once trailing 12-month revenue reaches 85 million.

Speaker #2: Providing additional financial flexibility as we transition towards cash generation. In summary, we're delivering commercial growth, maintaining strong gross margin, exercising control of operating expenses, and significantly reducing our use of cash.

Speaker #2: Together, those trends support our confidence in the increased revenue forecast we share today and our path towards cash generation. Today's results also reflect strong execution across the organization, commercial, operations, and corporate teams have worked together exceptionally well to scale the business while maintaining financial discipline.

Speaker #2: I'd like to thank everyone across AVITA for their commitment and execution during the first half of the year. With that, I'll hand the call back to Carrie.

David O'Toole: With that, I'll hand the call back to Cary.

Speaker #1: Thanks, David. Before we open the line for questions, I'd like to spend a few minutes on resale. It's the foundation of our business, and we continue to see encouraging progress in both physician utilization and the reimbursement framework that will support future growth.

Cary Vance: Thanks, David. Before we open the line for questions, I'd like to spend a few minutes on RECELL. It's the foundation of our business, and we continue to see encouraging progress in both physician utilization and the reimbursement framework that will support future growth. Following the transition of reimbursement across all seven Medicare Administrative Contractors, or MACs, physician utilization of RECELL continued to strengthen during Q2. Total US RECELL volume increased more than 10% sequentially this quarter to over 2,600 units. We're also seeing a growth driver emerge through RECELL GO mini. As you can see on the right-hand side of the slide, 77% of RECELL GO mini procedures year-to-date were performed in wounds of 500 square centimeters or less. That's exactly what we designed RECELL GO mini to do, to expand RECELL into smaller burn and trauma wounds.

Speaker #1: Following the transition of reimbursement across all seven Medicare administrative contractors, or MACs, physician utilization of resale continued to strengthen during the second quarter. Total US resale volume increased more than 10% sequentially this quarter to over 2,600 Units .

Speaker #1: We're also seeing a growth driver emerge through Resale Go Mini. As you can see on the right-hand side of the slide, 77% of Resale Go Mini procedures...

Speaker #1: Year to date were performed in wounds of 500cm² or less That's exactly what we designed . Resale go mini to do . To expand resale into smaller burn and trauma wounds .

Speaker #1: We also view the increased volume in the second quarter as an encouraging indicator of the underlying physician demand for resale, when reimbursement is stable and predictable.

Cary Vance: We also view the increased volume in Q2 as an encouraging indicator of the underlying physician demand for RECELL when reimbursement is stable and predictable. To that end, we are now entering the final stages of the transition to new category 1 CPT codes for skin cell suspension autograft, or SCSA, the procedure term for RECELL. As a reminder, beginning 1 January 2027, the new category 1 CPT code family for SCSA will replace today's multi-code structure. The current 8-code structure separates harvest, preparation, and application. This will be replaced by a simplified 4-code family based on anatomic location and wound size. In July, within its proposed 2027 Medicare payment updates, the Centers for Medicare & Medicaid Services, or CMS, proposed nationally published Physician Relative Value Units, or RVUs, for the new SCSA codes. We expect CMS to finalize the rule later this year.

Speaker #1: To that end , we are now entering the final stages of the transition to new category one CPT codes for skin cell suspension , autograph or SC .

Speaker #1: The procedure term for resale . As a reminder , beginning January 1st , 2027 , the new category one CPT code family for a will replace today's multi code structure .

Speaker #1: The current eight code structure separates harvest preparation and application . This will be replaced by a simplified four code family based on anatomic location and wound size .

Speaker #1: In July Within its proposed 2027 , Medicare payment updates , the centers for Medicare and Medicaid Services , or CMS , proposed nationally published physician Relative Value units , or Rvus , for the new SC codes .

Speaker #1: We expect CMS to finalize the rule later this year If adopted , as proposed . From this coming January , physician reimbursement would transition from today's regional Mac contractor price methodology to a nationally published Rvu framework , improving transparency and consistency for providers .

Cary Vance: If adopted as proposed from this coming January, physician reimbursement would transition from today's regional MAC contractor price methodology to a nationally published RVU framework, improving transparency and consistency for providers. Over time, we expect this to simplify reimbursement discussions, allowing our commercial teams and customers to focus less on coding complexity and more on clinical adoption and patient care. As I step back and look at the quarter, I'm incredibly encouraged by what we're seeing in our numbers. RECELL utilization is growing. Cohealyx and behind it, PermeaDerm, are gaining traction. Revenue continues to grow quarter after quarter, and we have a clear path to cash flow breakeven by year-end. Those aren't isolated achievements. They're evidence that the business is operating the way we intended it to. As we look to the remainder of 2026, we'll continue executing with the same discipline that has brought us to this point.

Speaker #1: Over time . We expect this to simplify reimbursement discussions , allowing our commercial team and customers to focus less on coding complexity and more on clinical adoption and patient care As I step back and look at the quarter , I'm incredibly encouraged by what we're seeing in our numbers Resale utilization is growing coeliacs and behind it permeate are gaining traction Revenue continues to grow .

Speaker #1: Quarter after quarter, and we have a clear path to cash flow break-even by year end. Those are isolated achievements; they're evidence that the business is operating the way we intended it to.

Speaker #1: As we look to the remainder of 2026, we'll continue executing with the same discipline that has brought us to this point. Our priorities are clear.

Cary Vance: Our priorities are clear. Continue expanding RECELL utilization, continue growing adoption of Cohealyx and PermeaDerm, and continue executing with commercial and financial discipline. As we continue to do those things effectively, we believe AVITA is well-positioned to create long-term value for shareholders while helping more patients benefit from our technologies. Thank you for joining us today and for your continued support. Operator, we're now happy to take questions

Speaker #1: Continue expanding resale utilization , continue growing adoption of Coeliacs and Permeator , and continue executing with commercial and financial discipline as we continue to do those things effectively .

Speaker #1: We believe AVITA is well positioned to create long-term value for shareholders while helping more patients benefit from our technologies. Thank you for joining us today and for your continued support. Operator, we're now happy to take questions.

Speaker #2: As a reminder to ask a question , please press star one . One on your telephone and wait for your name to be announced .

Operator: 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. Please stand by while we compile the Q&A roster. Our first question comes from Frank Takkinen with Lake Street Capital Markets. Your line is open.

Speaker #2: To withdraw your question , please press star one one again . Please stand by while we compile the Q&A roster Our first question comes from Frank Tarkenton with Lake Street Capital Markets .

Speaker #2: Your line is open

Speaker #3: Great . Thank you for taking the questions and congratulations on a really solid quarter . I was hoping to ask two questions . I'll ask them both up front and then hop back in queue to start on guidance .

Frank Takkinen: Great. Thank you for taking the questions, and congratulations on a really solid quarter. I was hoping to ask two questions. I will ask them both upfront and then hop back in queue. To start on guidance, maybe walk through the key pieces behind the guidance increase. I heard the comments about RECELL GO mini doing well and recovery, maybe kind of parsing out which contributed more. Then secondly, as you think about reimbursement in 2027, how much of a challenge has the previous structure been? Meaning, maybe what portion of cases or adoption by site has been hung up because of the previous structure, and maybe what do those new economics do to that? Thank you.

Speaker #3: Maybe walk through the key pieces behind the guidance increase . Heard the comments about resale go mini doing well and recovery . Maybe kind of parsing out which contributed more And then secondly , as you think about reimbursement in 2027 , how much of a challenge has the previous structure been meaning maybe what portion of cases or adoption by site has been hung up because of the previous structure ?

Speaker #3: And maybe one of those new economics do to that. Thank you.

Speaker #1: Thanks , Frank . Thanks for joining today . First of all , regarding guidance , it's fairly straightforward and simple . We're on a growth trajectory and when we set guidance at the beginning of the year , there were some things that we knew and some things that we didn't .

Cary Vance: Thanks, Frank. Thanks for joining today. First of all, regarding guidance, it's fairly straightforward and simple. We're on a growth trajectory, and when we set guidance at the beginning of the year, there were some things that we knew and some things that we didn't, and we set a pretty responsible guidance based on the trajectory we thought we would follow, and we're on a higher trajectory. So that's very clear to us now. I think we have eyes on the rest of the year. All of our customers, we've become very predictable in our forecasting, so we feel it's appropriate to raise it at this time to something that we believe we'll achieve.

Speaker #1: We said some pretty responsible guidance based on the trajectory we thought we would follow . And we're on a higher trajectory . And so that's very clear to us now .

Speaker #1: I think we have eyes on the rest of the year All of our customers , we've become very predictable in our forecasting . And so we feel it's appropriate to raise it at this time to , to something that we believe will achieve .

Speaker #1: And then second , from a reimbursement standpoint , if you just take the numbers part aside , the biggest problem last year was confusion And , and the amount of time that it took from our salespeople and our customers to try and get a handle on if they were going to get paid , what they were going to get paid .

Cary Vance: Then second, from a reimbursement standpoint, if you just take the numbers part aside, the biggest problem last year was confusion, and the amount of time that it took from our salespeople and our customers to try and get a handle on if they were going to get paid, what they were going to get paid, and when. So we've resolved that as kind of a placeholder, because that's what it was meant to be through the MACs, over time, by account. So what this will do is it will simplify the codes, but it will also make it absolute nationwide. So, as I said in my prepared remarks, it will move us from these clarifying more complex discussions with our customers to focus more on the clinical and economic benefits of the products.

Speaker #1: And when And so we've resolved that as kind of a placeholder , because that's what it was meant to be through the max over time , by account And so what this will do is it will simplify the codes , but it will also make it absolute nationwide And so as I said in my prepared remarks , it will move us from these clarifying more complex discussions with our customers to , to focus more on the clinical and economic benefits of the products And so that'll be very helpful to the efficiency and effectiveness of our , our sales team .

Cary Vance: So that'll be very helpful to the efficiency and effectiveness of our sales team and I think our uptake on RECELL, which is still very under-penetrated in the market.

Speaker #1: And I think our uptake on resale, which is still very under in the market,

Speaker #2: Thank you . Our next question comes from Ryan Zimmerman with U.S. Bancorp . Btig . Your line is open

Operator: Thank you. Our next question comes from Ryan Zimmerman with BTIG. Your line is open.

Speaker #4: Hi , this is Jaclyn on for Ryan . Thank you for taking the questions . I was just wondering with the proposed 2027 , FFS , is there any risk of a transitional air pocket as providers move from the eight legacy codes to the four new standardized codes ?

[Analyst] (BTIG): Hi, this is Jacqueline on for Ryan. Thank you for taking the questions. I was just wondering, with the proposed 2027 PFS, is there any risk of a transitional air pocket as providers move from the eight legacy codes to the four new standardized codes? What's the internal plan to get ahead of that educationally?

Speaker #4: And what's the internal plan to get ahead of that educationally

Speaker #1: Sure . So we've already begun communication with our teams who have started communicate with our customers so that that is already starting , even though all of that will be finalized in , you know , late October , early November , that proposed change is , is likely .

Cary Vance: Sure. We've already begun communication with our teams who have started to communicate with our customers. That is already starting, even though all of that will be finalized in late October, early November. That proposed change is likely, because of it, we're starting to educate them already as to how this will change. Some of the associations that we're a part of are also educating their members, a lot of burn surgeons, about the change as well. It's kind of a full-scale effort to make sure that everybody understands it very clearly by the time it hits 1 January.

Speaker #1: And because of it , we're starting to educate them already as to how this will change . And , and some of the associations that were a part of are also educating their members .

Speaker #1: A lot of burn surgeons about the change as well . And so it's kind of a full scale effort to make sure that everybody understands it very clearly .

Speaker #1: By the time it hits January 1st .

Speaker #4: Thank you. And then, with the one full data set previously expected at the end of ’26, and favorable interim data already reported in April showing faster time to skin grafting readiness versus the leading competitive products.

[Analyst] (BTIG): Thank you. With the Cohealyx-1 full data set previously expected in the end of 2026 and favorable interim data already reported in April showing faster time to skin grafting readiness versus the leading competitive products, can you confirm that the full data set timeline is still on track? What incremental information will add to further support back approvals and broader adoption?

Speaker #4: Can you confirm that the full data set timeline is still on track , and what incremental information will add to further support VAC approvals and broader adoption ?

Speaker #1: So we are still on track in terms of that timeline . The further data is just that there's a follow up . There's follow up data that's included as well .

Cary Vance: We are still on track in terms of that timeline. The further data is just that there is follow-up data that is included as well. That will be part of that submission and publication.

Speaker #1: That will be part of that submission . And publication .

Speaker #4: Thank you .

[Analyst] (BTIG): Thank you.

Speaker #1: You're welcome . Thank you

Cary Vance: You are welcome. Thank you.

Speaker #2: Thank you . As a reminder to ask a question , please press star one . One on your telephone . Again , that is star one .

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Again, that is star one one to ask a question. Our next question comes from Josh Jennings with TD Cowen. Your line is open.

Speaker #2: One to ask a question . Our next question comes from Josh Jennings with TD Cowen . Your line is open .

Speaker #5: Hi . Good afternoon . Thanks for taking the question and congrats on a great quarter . It's John on for Josh . I just wanted to ask you quickly on adoption across all three products .

[Analyst] (TD Cowen): Hi, good afternoon. Thanks for taking the question, and congrats on a great quarter. It's John on for Josh. I just wanted to ask you quickly on adoption across all three products, specifically what you're hearing from your sales reps in the field. What feedback are they giving you at the physician level in terms of doctors using all three products, and how does this influence your pricing across your product portfolio? I just had a quick follow-up.

Speaker #5: Specifically, what are you hearing from your sales reps in the field? What feedback are they giving you at the physician level in terms of doctors using all three products?

Speaker #5: And how does this influence your pricing across your product portfolio ? And just had a quick follow up

Speaker #1: Well , I think the feedback from a clinical perspective is very strong . I believe that each of the products stand on their own , and the physicians have told us that in terms of their clinical effectiveness , but also the economic benefit that they see .

Cary Vance: Well, I think the feedback from a clinical perspective is very strong. I believe that each of the products stand on their own, and the physicians have told us that in terms of their clinical effectiveness, but also the economic benefit that they see. It's still early days in them trying to figure out how two or three of Avita's products, PermeaDerm, Cohealyx, and RECELL, how they one plus one equals five or six in terms of synergies. We're working together with them to make sure that's maximized. Very positive. Some of our best customers are adopting all three technologies, and we expect that to continue going forward.

Speaker #1: It's still , you early days in them trying to figure how 2 or 3 of these products permeate Durham helix and resell how they how they one plus one equals 5 or 6 in terms of synergies But we're working together with them to , to make sure that's maximized .

Speaker #1: But very positive Some of our our best customers are adopting all three technologies . And we expect that to continue going forward

Speaker #5: Okay . Excellent . And then just in terms of pricing across the three individual units , you know , certainly appreciate that resale is accretive at the gross margin line .

[Analyst] (TD Cowen): Okay, excellent. Just in terms of pricing across the three individual units, certainly appreciate that RECELL is accretive at the gross margin line. Don't get me wrong, 85% and 86% gross margins are excellent at a product level. Is there anything you can do to keep improving that gross margin to potentially offset some of the dilution from Cohealyx and PermeaDerm?

Speaker #5: Is there any—don't get me wrong, 85% or 86% gross margins are excellent at a product level. Is there anything you can do to keep improving that gross margin to potentially offset some of the dilution from Helix and Derm?

Speaker #1: Sure . So Our operational team continues to look for efficiencies on the back end of our business . So we'll continue to to look for those as well as our opportunity to maximize price in the marketplace so that that'll be something that we'll continue to hold and try to expand .

Cary Vance: Sure. Our operational team continues to look for efficiencies on the back end of our business, so we'll continue to look for those, as well as our opportunity to maximize price in the marketplace. That'll be something that we'll continue to hold and try to expand going forward, as we should. In terms of the other products, Cohealyx and PermeaDerm, again, early days in trying to gain market penetration. We're always looking at price to make sure we're optimized there. We'll continue to do that.

Speaker #1: Going forward , as we should In terms of the other products , Helix and Permeate derm , again , early days and trying to gain market penetration , we're always looking at price to make sure we're optimized there So we'll continue to do that

Speaker #5: Excellent

[Analyst] (TD Cowen): Excellent.

Speaker #1: Thank you . John .

Cary Vance: Thank you, John.

Operator: Thank you. I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.