AVITA Medical gains financial room as RECELL growth lifts 2026 outlook

AVITA Medical, Inc. (ASX:AVH; Nasdaq:RCEL) has moved another step away from its liquidity crisis, reporting a 53% year-on-year revenue jump and drawing the final US$10 million available under its Perceptive credit facility. The acute wound care company raised its 2026 revenue guidance to US$92 million-US$94 million and said it still expects to reach cash flow breakeven in the December quarter.

The improvement is material, but not the same as profitability. AVITA recorded a US$6.2 million net loss for the September quarter, or US$0.20 a share, despite revenue rising to US$26.1 million from US$17.1 million. The loss included a US$2.1 million non-cash expense from the revaluation of warrants as AVITA’s share price increased. Stockholders’ equity remained negative at US$31.0 million at September 30.

RECELL leads revenue acceleration

RECELL remained the engine of the business, generating US$22.4 million in US revenue, up about 20% from the June quarter. The company attributed the increase to higher procedure volumes, account ordering and broader use of RECELL GO mini in trauma and smaller wounds. Total RECELL volume reached 3,196 units in the quarter, compared with 2,643 in the previous quarter.

Cohealyx also gained ground, with revenue rising 21% sequentially to US$2.1 million as more hospitals granted value analysis committee approvals. That product’s expansion sits alongside the earlier PermeaDerm clinical study, which involved 40 patients across 11 US burn centres and reported comparable outcomes to allograft with lower product cost and preparation time. PermeaDerm revenue itself was US$0.6 million, broadly flat on the June quarter.

Guidance rises while cash use contracts

Gross margin improved to 84.0%, from 81.3% a year earlier, helped by manufacturing efficiency, lower volume discounts and a higher average selling price. RECELL’s standalone gross margin was 88.4%, although the company expects its broader product mix to keep influencing the consolidated figure because AVITA shares the average selling price for Cohealyx and PermeaDerm with its commercial partners.

Operating expenses increased 7% to US$24.6 million, with higher sales commissions, incentive compensation and research and development costs offsetting lower general and administrative spending. Even so, quarterly net cash use fell sharply to about US$0.6 million from US$3.2 million in the June quarter. The new full-year guidance implies fourth-quarter revenue of US$24.9 million-US$26.9 million, setting a demanding test for the promised cash flow breakeven.

Debt provides liquidity but adds obligations

AVITA reached the US$85 million trailing-12-month revenue threshold required to access the final tranche of its five-year, senior secured facility with Perceptive. The additional borrowing brings total facility borrowings to US$60 million. Management said the stronger operating performance and liquidity position removed the substantial doubt previously attached to the company’s ability to continue as a going concern, allowing the debt to be classified as long term.

The balance sheet still carries meaningful pressure. Cash, cash equivalents and marketable securities stood at about US$10.5 million at quarter-end, while the facility carried an 11.5% interest rate at September 30 and is secured against substantially all of AVITA’s assets. The lender also received warrants covering up to 650,000 shares, with 150,000 becoming exercisable after the additional borrowing. That makes the funding less immediately dilutive than an equity raise, but it is not cheap capital.

CMS reimbursement decision sets up 2027 test

One potentially important commercial change arrives on January 1, 2027. The Centers for Medicare & Medicaid Services has finalised national physician payment values and simplified billing codes for RECELL procedures, replacing the more fragmented regional pricing approach. The company said earlier reimbursement uncertainty had slowed utilisation; the new national framework may make payment clearer, but the filing does not establish how quickly hospitals or clinicians will change their ordering behaviour.

For now, the near-term scoreboard is unusually clear: AVITA must deliver at least roughly US$24.9 million of fourth-quarter revenue, reduce cash use to breakeven and remain compliant with its debt covenants. The January reimbursement changes then create a second test, with the company needing to show that improved payment clarity translates into sustained procedure volumes rather than merely a strong closing quarter.