AVITA Medical reported a 13% revenue decline in Q3 2025 but improved cash efficiency and secured Medicare payment confirmations for RECELL®, positioning for growth in 2026.
- Q3 2025 revenue down 13% year-over-year to $17.1 million
- Operating expenses reduced by 24%, net loss improved 18.5%
- Medicare Administrative Contractors confirm payment rates for RECELL® across all regions
- Focus on expanding RECELL® adoption in ~200 key burn and trauma centers
- Cash use improved to $6.2 million, supported by $13.8 million private placement
Financial Performance and Cost Management
AVITA Medical’s third quarter results for 2025 reveal a mixed but cautiously optimistic picture. Revenue declined 13% year-over-year to $17.1 million, reflecting ongoing challenges in market penetration and product mix. Gross margin slipped by 240 basis points to 81.3%, impacted by the inclusion of newer products like Cohealyx and PermeaDerm, which carry different pricing dynamics compared to the flagship RECELL® system.
Despite the top-line pressure, the company demonstrated disciplined cost control, cutting operating expenses by nearly a quarter to $23 million. This efficiency gain translated into an 18.5% improvement in net loss, which narrowed to $13.2 million. The improved cash flow management is further underscored by a reduction in cash burn to $6.2 million for the quarter, down from $10.1 million in Q2, supported by a $13.8 million net capital raise completed in August.
Medicare Reimbursement Milestone
A significant highlight for AVITA is the confirmation of Medicare payment rates for RECELL® by all seven Medicare Administrative Contractors (MACs). This development provides physicians and hospitals with greater confidence in reimbursement predictability, a critical factor for wider adoption of the RECELL® procedure. The alignment of clinical data, reimbursement, and a Category 1 CPT code reinforces the product’s value proposition for burn and trauma treatment.
Market Opportunity and Strategic Focus
AVITA is targeting approximately 200 key burn and trauma centers across the United States, representing a $3.5 billion total addressable market. Currently, the company serves about 5% of this market, indicating substantial room for growth. The focus on high-volume centers and the potential for cross-product adoption within its portfolio suggest a scalable growth trajectory. The company’s commercial efforts in Q4 2025 aim to refine execution and position AVITA for a stronger 2026.
While the near-term revenue dip may raise eyebrows, the strategic moves around reimbursement clarity and cost discipline could set the stage for improved market penetration. Investors will be watching closely how these factors translate into sales momentum and profitability in the coming quarters.
Bottom Line?
AVITA’s cost cuts and Medicare reimbursement wins set the stage for a pivotal 2026 growth phase.
Questions in the middle?
- How quickly will confirmed Medicare payments translate into increased RECELL® adoption?
- What impact will the product mix shift have on future gross margins?
- Can AVITA expand beyond the current 5% market penetration in key burn and trauma centers?