AVITA Medical reported a 21% increase in Q2 commercial revenue to $18.4 million and narrowed its net loss, yet faces a reimbursement hurdle that forced a downward revision of full-year guidance. The company highlights clinical progress and strategic board appointments as it navigates payment challenges.
- Q2 commercial revenue rises 21% to $18.4 million
- Net loss improves to $9.9 million from $15.4 million year-on-year
- Medicare Administrative Contractor payment delays reduce RECELL demand
- Full-year 2025 revenue guidance cut to $76-$81 million from $100-$106 million
- New board member Michael Tarnoff appointed, clinical milestones achieved
Financial Performance and Challenges
AVITA Medical, a leader in therapeutic acute wound care, announced its second quarter 2025 results showing a 21% increase in commercial revenue to $18.4 million compared to the same period last year. The company also reported a significantly improved net loss of $9.9 million, down from $15.4 million in Q2 2024, reflecting tighter cost controls and operational efficiencies.
Despite these gains, AVITA faced a substantial headwind due to delays in Medicare Administrative Contractor (MAC) payments for its flagship RECELL System. This disruption caused a backlog of unpaid claims and uncertainty among healthcare providers, leading to a roughly 20% drop in RECELL demand and an estimated $10 million revenue shortfall in the first half of 2025.
Guidance Revision and Strategic Adjustments
In response to the reimbursement challenges, AVITA revised its full-year 2025 revenue guidance downward to a range of $76 million to $81 million, a notable reduction from the previous $100 million to $106 million forecast. The company now expects to reach cash flow break-even and GAAP profitability in 2026, pushing back earlier targets due to the ongoing payment issues.
To support its financial position, AVITA amended credit terms with OrbiMed, lowering revenue covenants and issuing common stock in lieu of cash fees. This move underscores a strong partnership and confidence in AVITA’s long-term strategy despite near-term headwinds.
Clinical Progress and Market Positioning
On the clinical front, AVITA highlighted several important milestones. The RECELL System demonstrated a 36% reduction in hospital stays in a national burn registry analysis, reinforcing its value proposition. Additionally, the Centers for Medicare and Medicaid Services (CMS) approved a New Technology Add-on Payment (NTAP) for RECELL in inpatient trauma wound settings, expanding Medicare coverage.
Other product innovations include Cohealyx achieving autograft readiness in as little as five days and PermeaDerm gaining exposure through multiple U.S. burn conferences and clinical trials. These advances position AVITA well for future growth as reimbursement pathways stabilize.
Leadership and Outlook
Strengthening its governance, AVITA appointed Michael Tarnoff, MD, FACS, a seasoned healthcare executive with leadership experience at Tufts Medical Center and Medtronic, to its Board of Directors. This addition signals a commitment to deepening clinical and operational expertise as the company navigates its next growth phase.
CEO Jim Corbett acknowledged the challenges but emphasized the company’s resilience and strategic focus on accelerating patient recovery times and delivering value to providers. With multiple MACs now beginning to adjudicate claims, AVITA anticipates demand recovery in the second half of 2025.
Bottom Line?
AVITA’s near-term reimbursement hurdles temper growth expectations, but clinical validation and strategic moves set the stage for a potential turnaround in 2026.
Questions in the middle?
- How quickly will Medicare Administrative Contractors fully resolve payment backlogs for RECELL?
- What impact will the revised credit terms with OrbiMed have on AVITA’s financial flexibility?
- Can new clinical data and NTAP approval accelerate adoption enough to offset earlier revenue shortfalls?