TechInvest News

AVITA Medical Reports Strong Q3 Growth with RECELL GO Sales Surge and Prepares for New Product Launches

Written by Staff Writer | Nov 7, 2024 11:04:29 PM

AVITA Medical, Inc. (NASDAQ: RCEL, ASX: AVH), a leader in regenerative medicine and wound care technology, posted robust Q3 financial results for 2024, buoyed by strong demand for its flagship product, RECELL GO, in the wound care market. The company’s revenue for Q3 reached $19.5 million, marking a 44% increase over the same period last year and a 29% jump from Q2—a record-setting performance that underscores the growing adoption of RECELL GO as a transformative treatment option.

Key Drivers of Growth: RECELL GO Takes Centre Stage

RECELL GO, AVITA’s innovative skin regeneration system, has emerged as a major revenue driver, accounting for over 75% of the company’s income this quarter. This device enables “Spray-On Skin™” cell technology, which uses a patient’s own cells to accelerate healing, offering a powerful solution for full-thickness skin defects and burn injuries. CEO Jim Corbett highlighted the impact of RECELL GO’s success, stating, “With over 75% of our revenue base now transitioned to RECELL GO and the anticipated launch of Cohealyx in 2025, we are positioned to address a broad continuum of wound care needs.”

AVITA's recent focus on deepening relationships within existing accounts and targeting new healthcare facilities has proven effective, with RECELL GO seeing strong uptake across various medical applications. The company’s gross profit margin remains impressive at 83.7%, slightly lower than last year’s 84.5% due to ongoing engineering work for RECELL GO’s cartridges, but still reflecting the product’s profitability.

Strategic Partnerships and Product Pipeline Expansion

In addition to robust sales growth, AVITA secured a multi-year distribution agreement with Regenity Biosciences, granting AVITA exclusive rights to Cohealyx™, a collagen-based dermal matrix that complements RECELL GO in the wound care market. Cohealyx™ is expected to receive FDA clearance by year-end, with a market launch scheduled for January 2025. This addition enables AVITA to provide a more comprehensive wound care solution, further strengthening its market position.

The company also anticipates FDA approval of the RECELL GO mini by December 31, 2024, which will allow AVITA to cater to a broader range of wound care needs, including smaller and more targeted applications.

Financial Position and Strategic Realignment

With cash and marketable securities totalling $44.4 million at the end of Q3, AVITA remains well-capitalised to fund its growth initiatives. Notably, AVITA amended its credit agreement with OrbiMed, opting to forgo an additional $50 million in funding in exchange for waiving revenue covenants, providing financial flexibility without the pressure of near-term financial milestones.

While operating expenses rose to $30.2 million, primarily due to higher sales and marketing costs as well as an increase in R&D, the company’s investment in growth is targeted to support its expanding product range. The R&D team continues to advance key projects, including preparations for a post-market clinical study of Cohealyx™ in Q1 2025 to further validate its efficacy.

Future Outlook: Growth Projections and Path to Profitability

Looking ahead, AVITA expects commercial revenue to reach between $22.3 million and $24.3 million in Q4, representing a 58% to 72% increase over Q4 2023. For the full year, the company’s revenue forecast of $68 million to $70 million would represent annual growth of approximately 37% to 41%. AVITA is on track to reach cash flow break-even and achieve GAAP profitability by the end of Q3 2025.

With RECELL GO’s rising market share and the anticipated launch of Cohealyx™ and RECELL GO mini, AVITA is well-positioned to sustain its growth momentum. This strategic expansion reflects the company’s commitment to setting new standards in wound care and skin restoration, creating improved clinical outcomes for patients.

As AVITA prepares for multiple product launches and aims to broaden its impact across wound care, its Q3 performance highlights both the company’s operational strength and its potential for long-term growth in regenerative medicine.