Liquidity Concerns Shadow AVITA Medical’s Q3 Revenue Gains and Strategic Progress

Revenue Growth and Product Expansion

AVITA Medical, a therapeutic acute wound care company, reported an 18% increase in total revenues for the nine months ended September 30, 2025, reaching nearly $54 million. This growth was largely fueled by deeper penetration in existing customer accounts, new accounts targeting traumatic and surgical wounds, and the commercial launch of new products including RECELL GO mini and Cohealyx. The RECELL portfolio, which harnesses patients’ own skin cells to accelerate wound healing, continues to gain traction in U.S. burn and trauma centers, supported by recent FDA approvals and CE Mark certification for RECELL GO in Europe.

Despite the revenue growth, AVITA’s gross profit margin declined slightly to 82.4%, impacted by product mix shifts, volume discounts, and higher inventory reserves. The company’s strategy to expand adoption of complementary products like Cohealyx and PermeaDerm, which have lower gross margins, is expected to continue influencing overall profitability metrics.

Financial Challenges and Credit Agreement Amendments

AVITA Medical remains unprofitable, reporting a net loss of $36.97 million for the nine-month period, although this represents a 26% improvement compared to the prior year. Operating expenses decreased by 11%, reflecting cost-saving initiatives including sales force reductions and lower stock-based compensation expenses. The company’s cash position stood at approximately $15.4 million, supplemented by $7.9 million in marketable securities as of September 30, 2025.

However, AVITA continues to face significant liquidity risks. The company has not met certain trailing 12-month net revenue covenants tied to its $40 million loan facility with OrbiMed Advisors. It has secured multiple waivers and amendments to ease these revenue requirements, including a recent sixth amendment in November 2025 that lowered the covenant for the quarter ending December 31, 2025, and waived going concern qualifications in its filings. Despite these measures, management acknowledges substantial doubt about the company’s ability to maintain minimum cash balances required by the credit agreement over the next 12 months, raising the risk of debt acceleration.

Strategic and Operational Developments

On the commercial front, AVITA secured a New Technology Add-On Payment (NTAP) from Medicare for the RECELL System, providing up to $4,875 additional reimbursement per inpatient case for qualifying acute non-thermal full-thickness skin defects. This reimbursement milestone is expected to support broader hospital adoption and revenue recovery after earlier headwinds from reimbursement uncertainties.

The company also completed a $14.8 million private placement on the ASX in August 2025, bolstering working capital to support ongoing growth initiatives. AVITA’s strategic focus remains on expanding market penetration in U.S. burn and trauma centers, commercializing RECELL GO in Europe and other international markets, and advancing clinical data through post-market studies of Cohealyx and PermeaDerm.

Leadership Transition and Outlook

In a significant leadership change, CEO James Corbett departed effective October 16, 2025. Cary Vance, the company’s Chairman of the Board, was appointed interim CEO while continuing as Chairman. Jan Reed was named Lead Independent Director. This transition comes at a critical juncture as AVITA navigates financial pressures and seeks to execute its growth strategy.

Looking ahead, AVITA Medical faces the dual challenge of sustaining commercial momentum while securing additional funding to maintain compliance with debt covenants and support operations. The company is actively exploring equity and debt financing options, but uncertainties remain regarding the timing and terms of future capital raises.