AVITA Medical Faces Reimbursement Hurdles Amid Refinancing and Growth Plans

Navigating Reimbursement Headwinds

AVITA Medical, a therapeutic acute wound care company listed on both NASDAQ and ASX, released its financial results for the fourth quarter and full year ended December 31, 2025. The quarter saw a slight revenue decline to $17.6 million, down 4% from the prior year, primarily due to ongoing Medicare reimbursement challenges that have constrained utilisation of its flagship RECELL product.

Despite this, the company maintained a strong gross profit margin of 81.2%, supported by a favourable product mix and inventory adjustments. Notably, RECELL-only gross margin remained robust at 83.1%, although the introduction of newer products with different margin structures moderated overall profitability percentages.

Cost Discipline and Cash Efficiency

AVITA Medical demonstrated improved financial discipline, reducing operating expenses by 5% year-on-year to $24.7 million in Q4. This included a significant $2.2 million reduction in sales and marketing costs, reflecting lower salaries, benefits, and commissions. Research and development expenses increased modestly due to clinical trial activities, signalling ongoing investment in innovation.

Cash use improved for the third consecutive quarter, with net cash outflow narrowing to approximately $5.1 million, down from $6.2 million in the previous quarter. The company ended the year with $18.2 million in cash and marketable securities, down from $35.9 million at the end of 2024, underscoring the importance of recent refinancing efforts.

Strengthening the Balance Sheet

In January 2026, AVITA Medical secured a new five-year credit facility worth up to $60 million from Perceptive Advisors LLC, a healthcare-focused investment firm. An initial $50 million tranche was drawn to repay existing debt, with an option to access an additional $10 million subject to revenue milestones. The facility features revenue covenants aligned with the company’s operating trajectory, providing financial flexibility to support growth initiatives.

Clinical Progress and Market Outlook

Clinical development remains a key focus, with the Cohealyx I study fully enrolled and the PermeaDerm I study surpassing 75% enrollment as of December 2025. Data from these studies are expected later this year, potentially validating the expanded use of AVITA’s product portfolio. Additionally, Medicare Administrative Contractors have published payment rates for RECELL in six of seven regions, easing a major barrier to wider adoption.

Looking ahead, AVITA Medical forecasts full-year 2026 revenue between $80 million and $85 million, representing growth of 12% to 19%. Interim CEO Cary Vance emphasised a shift from stabilization to execution, aiming for consistent, quarter-by-quarter growth driven by deeper utilisation in core burn and trauma centres.