AVITA Therapeutics Aktie

Good day, and thank you for standing by. Welcome to the PermeaDerm KOL webinar. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ben Atkins, Vice President of Investor Relations at AVITA.

Thank you, and welcome to the AVITA Medical PermeaDerm Key Opinion Leader webinar. Today, we will be reviewing data and cases from our PermeaDerm-I study, which evaluated PermeaDerm as a wound temporizer compared with cadaveric allograft.

Before we begin, I'd like to remind you that today's call will include forward-looking statements regarding AVITA's current expectations about future events. Please refer to Slide 3 for additional details. I should also like to add that this presentation will include images of burns and wounds.

It's now my pleasure to hand over to Katie Bush, AVITA Medical Senior Vice President of Scientific and Medical Affairs.

Thank you, Ben. Today's discussion will focus on our PermeaDerm-I clinical study readout and 2 surgeons clinical experience with the product as part of our broader AVITA portfolio. Joining us today are Dr. Anju Saraswat, Assistant Professor of Surgery at Wake Forest University School of Medicine; and Assistant Medical Director of the Atrium Health Wake Forest Baptist Burn Center. Also, Dr. Christina Sharon, a Burn and Acute Care Surgeon and the Burn Director at Baton Rouge General in Louisiana. In a moment, Dr. Saraswat will provide an overview of our clinical trial results, then Dr. Sharon will provide her experience using PermeaDerm as part of the AVITA portfolio. We will then open the line for questions. Before I hand over the presentation to Dr. Saraswat, let me provide some background information on how PermeaDerm fits in the AVITA portfolio.

At AVITA Medical, our purpose is healing at the speed of life, helping patients heal sooner and return to their lives faster. To achieve that, we have built a portfolio of 3 complementary technologies that support clinicians across the continuum of acute wound care, from preparing and stabilizing the wound with PermeaDerm, rebuilding the wound with Cohealyx to ultimately restoring the patient's skin with RECELL. Individually, each product addresses a critical stage of treatment. Together, they provide a more comprehensive approach, proven to improve clinical outcomes while reducing the burden of care to the patient and hospital. Across the portfolio, more than 225 publications, together with a growing number of company-sponsored and investigator-initiated studies continue to strengthen the evidence base supporting our technologies. Today's data builds on that body of evidence, complementing the recent interim results from our multicenter Cohealyx-I study, the webinar for which is available on our website.

Today's focus is PermeaDerm. We will review its role as a temporizer, a concept central to the PermeaDerm-I trial and discuss how it can help surgeons stabilize and protect the wound before final reconstruction. When we have discussed PermeaDerm previously, we've described it as protecting and stabilizing the wound. Let me explain why that's important. Definitive wound closure is always the goal, but in many cases, it is not possible immediately. A patient may require further stabilization, the wound bed may just not be ready yet or donor skin may be limited, that is where temporization fits. PermeaDerm provides temporary wound coverage that helps bridge the period between excision and definitive closure, maintaining a protective environment until reconstruction can proceed.

This clinical role is central to the PermeaDerm-I study we'll discuss today and reflects how the product is increasingly being positioned in practice as an alternative to allo during this critical stage of care. Cadaveric allografts have been used for temporization for more than a century and remain a familiar option in burn care when definitive closure is not yet possible. They are one of the oldest approaches in burn care. While widely used, allografts require frozen storage, tissue tracking and thawing before application, which adds time and complexity in the operating room.

Tissue characteristics could also vary from donor to donor including thickness and consistency, and they are available only in certain sizes based on donor harvesting capabilities. In addition, because they are human derived, allografts carry a risk of disease transmission and immunogenic response. PermeaDerm is a modern approach to temporization a biosynthetic wound matrix designed to provide temporary coverage similar to allograft yet reducing the logistic burden of human donor tissue.

PermeaDerm mimics key features of native skin through a bilayer structure that protects the wound, allows oxygen exchange and supports healing. It is fully removed prior to definitive closure, making it a temporary bridge rather than a permanent implant. PermeaDerm is also transparent. This allows at a glance wound assessment with a clear view to the wound healing process, minimizing disruption to the patient, the wound or the product itself.

I will now turn the presentation over to Dr. Saraswat to review the PermeaDerm-I clinical trial results.

Thank you, Katie. As surgeons, we need temporary wound coverage that bridges excision and definitive skin grafting. Traditionally, that role has been filled by allograft. But allograft has limitations, including cost, availability and workflow. The question we wanted to answer was straightforward, can PermeaDerm provide a clinically comparable alternative while reducing the cost of care? That's the rationale behind the PermeaDerm-I study. This is a randomized controlled trial involving 40 patients with wounds covering up to 30% of total body surface area. Following excision, patients received either PermeaDerm or allograft during the temporization period before undergoing split thickness skin grafting. Patients were then followed for 8 weeks.

Importantly, we looked at multiple endpoints. We evaluated what matters in clinical practice, graft take, healing, inflammation, adverse events and surgeon experience. We also measure the practical aspects that matter to hospitals, including preparation time, application time and the cost of treating the wound. Taken together, these endpoints were designed to determine whether PermeaDerm could deliver comparable clinical performance while offering meaningful economic advantages over allograft. Collectively, 11 burn centers contributed data to the study and are listed here on this slide. The participation in multiple investigators across diverse institutions and patient populations help demonstrate that these findings are representative of real-world burn and wound care rather than the experience of a single center.

Now turning to the results. The primary endpoint of the study was met. PermeaDerm reduced treatment cost by 70% compared with allograft, and that difference was statistically significant. If you look at the chart on the left, the difference is immediately apparent. On a cost per percent TBSA treated basis, the mean cost was $148.70 for PermeaDerm versus $497.10 for allograft. For clinicians and hospitals, that's a meaningful result. It demonstrates that PermeaDerm can deliver the temporary wound coverage we need while substantially reducing the cost of care. Put another way, PermeaDerm reduced costs by approximately $348 for every 1% of TBSA treated, highlighting the potential economic impact in routine clinical practice. The workflow benefits were just as compelling as the cost findings. PermeaDerm reduced preparation time by nearly 96% compared with allograft. The reason is straightforward. Unlike allograft, PermeaDerm does not require tissue tracking, thawing or meshing, so it's ready for use immediately. Once in the hands of the surgeons application time was comparable between the 2 groups.

The key question, of course, is whether those economic and workflow advantages came at the expense of healing? Based on these results, the answer is no. Clinical outcomes were highly comparable between the 2 groups. At 1 week following grafting, approximately 94% of PermeaDerm patients achieved at least 95% graft take, essentially the same with allograft. By 8 weeks, all patients in both groups have achieved wound healing, demonstrating comparable progression to definitive closure. Taken together, these findings show that PermeaDerm delivered meaningful cost and workflow advantages while maintaining the outcomes surgeons expect when using temporary wound coverage. As these products are used in medically complex burn patients, safety is in an extremely important part of the study.

Reassuringly, there were no PermeaDerm related adverse events. And overall, adverse events were numerically lower with PermeaDerm than allograft, including fewer study area events. Wound bed biopsies also showed no meaningful differences in inflammation between groups. Overall, these findings support the safety of PermeaDerm as a temporary wound coverage option. Investigators and patients both reported high satisfaction with PermeaDerm with 100% in each group rating it satisfied or very satisfied. This is an important practical signal, suggesting the product is well tolerated by patients and easy to incorporate into a surgeon's operative workflow.

The aggregate data we've reviewed is supported by what we observed in individual patients. This slide shows a comparative case example, illustrating how PermeaDerm performed relative to allograft. These 2 patients were similar in age and had wounds with similar size, mechanism of injury as well as wound location. Following excision of these full thickness burns down to fat, both wounds require temporary coverage before allograft placement. As you can see, both products provided effective wound protection throughout the first several days. An important difference, however, is that PermeaDerm is transparent, allowing the surgeon to directly visualize the wound bed without removing the dressing. That visibility can make ongoing assessment easier while maintaining wound coverage something that isn't readily available with allograft on the wound bed.

At 1 week, the PermeaDerm and allograft were removed and allograft was applied. The images on the right of the screen are 8 weeks follow-up and demonstrate comparable healing outcomes. This representative case illustrates that PermeaDerm provided effective interim coverage in a manner that was clinically comparable to allograft with the added practical advantage of visualization of the wound bed without removal of the product. Taken together, the data from the trial suggests that PermeaDerm delivered comparable clinical results with less workflow burden and lower cost. We saw comparable graft take in healing, no difference in safety or inflammatory profile and high satisfaction from both surgeons and patients.

From a practical standpoint, PermeaDerm also simplified workflow by eliminating thawing, meshing and tissue bank logistics, while remaining easy to integrate into clinical protocols. PermeaDerm is also predictable as it comes in standardized configurations unlike allograft, which can vary in size and thickness depending on donor and vendor. Also, PermeaDerm is a synthetic product that is not subject to the supply constraints or donor availability limitations that can possibly be associated with Cadaver skin. And economically, the product demonstrated a 70% reduction in product cost. Together, these findings support PermeaDerm as a temporizing option with meaningful operational and economic advantages.

I will now pass over the presentation to Dr. Sharon who will be talking about her clinical experience with the product.

Thank you, Dr. Saraswat. I have been familiar with AVITA through RECELL and over time, I have come to appreciate the value of having options that support patients across the full wound healing pathway. In my practice, I start with the end in mind. Building a plan around how I will prepare the wound bed, rebuild the tissue and ultimately get skin on these patients and back to their lives. What intrigued me about PermeaDerm was its potential role as an alternative to allograft for temporary wound coverage. It gives me a practical way to assess whether the wound is ready for grafting or whether additional excision is needed.

And from an operative standpoint, reducing logistics in the OR and saving money for the hospital is always welcome. I will be sharing 2 cases from my practice with you today, in which I use PermeaDerm, Cohealyx and RECELL. I will focus primarily on the PermeaDerm component, but also discuss the final outcomes for these patients. This illustrates how the AVITA portfolio can be used across the continuum of care in a patient with an extensive 45% TBSA area burn. Given the severity of the injury, it is clear from admission that definitive closure would need to occur in stages. That made temporary wound coverage, an important part of the treatment strategy while we stabilize the patient and prepare the wound bed for reconstruction.

These images are post excision of the wound and PermeaDerm was applied as a temporary wound covering. Clinical assessment of this wound indicates a clean wound bed, and there were no signs of active infection. But unfortunately, with this patient due to other injuries, there was a delayed time to first excision debridement and the patient was at risk for infection and wound conversion. One of the advantages I value most about PermeaDerm is its transparency. It allows me to directly visualize the wound bed without removing the product, making it easier to assess tissue viability and determine whether additional excision is needed. In this patient, that visibility proved valuable. It confirmed that portions of the wound converted and required further excision while other areas have developed a healthy, well vascularized wound bed.

You can see on the arm how well vascularized the wound bed is, but that an area on the back needed additional excision. We then reapply PermeaDerm following the re-excision of the back and left the PermeaDerm on the arm in place. Once the wound bed was optimized, we transitioned to definitive reconstruction, Cohealyx was used to further support the wound bed, followed by a 6:1 wide mesh, split thickness skin graft and RECELL together with cultured epithelial allografts to achieve definitive closure. The patient was discharged on day 48 with 98% wound closure, and these photographs at 71 days demonstrate an excellent overall outcome. For me, this case highlights how the AVITA portfolio can work together. PermeaDerm to protect and assess the wound during temporization; Cohealyx to optimize the wound bed and RECELL to help achieve definitive closure.

This is another example in which the full portfolio was used. The patient presented with 22% TBSA burns, involving both lower extremities and the hand. After excision PermeaDerm was used to provide temporary wound coverage while allowing us to determine whether any additional excision will be necessary before definitive closure. One feature I'd like to highlight is the PermeaDerm glove shown on the right. Hands can be particularly challenging to address because of their complex anatomy. The glove conforms well to the hand, provides uniform coverage and is much more efficient than individually wrapping each finger.

After 8 days of temporization, the wound bed was ready for definitive reconstruction. At that point, we proceeded with skin grafting and RECELL with Cohealyx to support the healing environment. Again, this illustrates how the products are used sequentially with each serving a distinct purpose as the patient progresses through treatment. By 30 days, the vast majority of the wounds had healed with only a few areas still open, which can happen following wide mesh allografting, especially over subcutaneous fat. Rather than leaving those areas to heal on their own, I applied small strips of Cohealyx to support continued closure and to fill defects. This is an example of how I use Cohealyx beyond the initial procedure to help manage the final stages of healing when needed.

At the 45-day follow-up visit, the patient was healed. There was some hyperemia, which is expected in the lower extremities, and this gradually dissipates over time. In my experience, PermeaDerm is a useful tool that allows me to temporize patients with confidence. In my experience, it is clinically predictable, easy to use in the OR and straightforward for my staff to manage afterwards. It helps me assess the wound bed in real time and give me a clear path to proceed to grafting with confidence.

I will now turn it over to Katie for final remarks.

Thank you, Dr. Saraswat and Dr. Sharon for sharing your experience and walking us through the data. Taken together, the clinical study in these real-world cases reinforce 3 key themes: strong clinical performance, a simpler workflow and a meaningful economic advantage. We believe those attributes position PermeaDerm as a compelling alternative to allograft and an important part of AVITA's acute wound care portfolio. We'll now open the call for questions. I'll be moderating today's discussion, and we encourage you to direct your questions to our surgeons on the study results, the clinical data or their practice experience using PermeaDerm and burn care.

Operator, please open the line for questions.

[Operator Instructions] And our first question comes from Ryan Zimmerman with U.S. Bancorp BTIG.

This is Izzy on for Ryan. I just wanted to start to post the question to either of you actually. But the study was -- the study started with patients that have 30% TBSA. I was curious if you think the results that you've seen from the data would be able to generalize into larger burns?

Dr. Saraswat, do you want to go ahead and field that question?

Sure. I'd be happy to. So -- just to clarify the question, you're asking, can the product be used for burns larger than 30% TBSA?

Yes. Do you think that the results are generalizable into burns above that 30% TBSA and potentially, is there plans to study in that population?

The short answer is yes. I mean this was the first study demonstrating the usefulness as an alternative to allograft. And this is something that for a patient with a larger TBSA, we would absolutely use allograft to temporize the wound bed. So I think it would be something that we could easily interchange with PermeaDerm. We highlighted has benefits compared to allograft and it's easy to use.

I was just going to ask if Dr. Sharon had any other comments to make.

I agree with Dr. Saraswat. I have actually used it personally on 45%, 50%, 70% TBSAs and have had really good outcomes. So I think it does translate.

And just as a follow-up, are there any wound characteristics or potentially like patient profiles where you would still prefer to use allograft over PermeaDerm or any limitations to PermeaDerm in your experience so far?

Dr. Saraswat, do you want to go ahead and answer first and then Dr. Sharon, if you have any additional comments.

Sure. Yes. I was kind of running through my head all the reasons I would use allograft. And really, I can't think of a situation where I would not use PermeaDerm instead, especially because, as Dr. Sharon highlighted, you can see right through it and evaluate the wound bed. And so you can oftentimes make decisions with a shorter timeline with the ultimate goal of getting these patients grafted and out of the hospital and healed faster. So I obviously can't think of a limitation to this.

I would echo that statement. I quite honestly don't even use allograft anymore. I've predominantly transitioned to all PermeaDerm for temporization.

[Operator Instructions] Our next question comes from Josh Denning with TD Cowen.

I wanted to just -- I think you've answered this already, but just to formally put it on the tape, if costs were identical across the products, PermeaDerm and Cadaveric allograft, I mean it sounds like you'd still use PermeaDerm and I think your answers in the presentation made that clear, but just to check that box.

Dr. Saraswat, do you want to lead and Dr. Sharon follow?

Sure. Yes. I mean, yes, we've kind of both echoed the same thing that it's a great product to use. It really doesn't have -- like allograft really doesn't have any advantages over it. The other thing I would add is that we have to keep a certain amount of allograft on stock, and that's just kind of predicting -- say, we have several large burns that would use up that supply very quickly versus PermeaDerm, we don't have those type of supply risk constraints. And there's a lot of frustration that is involved with allograft varying based on your vendor and you can get different sizes and you still have to put work into preparing the product before applications.

So as surgeons, when we -- when we're trying to coordinate all the components in the operating room, we have to task somebody with, okay, you have to wait for this product to thaw and then you have to unwrap it. It's in multiple layers. You don't have to mesh it and that's kind of expecting that the person that you're tasking that to know how to do that properly. And with PermeaDerm it's very easy. We need this product, please open it and then you just kind of put your hand out, and it's available. So again, I don't use allograft very often, and it's happy to be part of the study because it really does demonstrate the usefulness as an alternative to allograft.

Yes. I think the ease of use like Dr. Saraswat was saying is it comes in a variety of different sizes, and then it's just very easy. You pull it off your shelf, you apply it to the wound bed, it stretches even I think the largest is like 15 x 30 inches just like, I'm not going to convert that right now, like 72 x 30-something centimeter square. But if you stretch it like it's supposed to be applied, that actually increases the amount of coverage you can do too. So it's like ease of use and it can stretch beyond as far as centimeter squared coverage than what's actually on the product. So it's pretty fantastic.

I appreciate those answers. And more than I had bargained for, but those are fantastic. I wanted to just ask about just whether PermeaDerm is doing something biologically different than cadaveric allograft, just looking at the case presentation. It just looked like there's potential and maybe there's some earlier data that's out there that was presented at prior burn meetings about earlier vascular growth and some more organized tissue formation and decreased inflammation that PermeaDerm is affording these wounds and potentially allowing -- generating a healthier wound bed before the next step, but I wanted to bounce that off if you, I just have one more follow-up.

And so I can certainly take that question. And so part of the PermeaDerm study was that we actually did tissue biopsies of PermeaDerm beds as well as the allograft beds and looked at all of the components that you mentioned and we did not see any differences with what the beds were doing. But likely what you are seeing, especially in the clinical cases that were presented is the fact that you can visualize the wound bed versus with the cadaver, you can't see what that wound surface looks like.

And I don't know Dr. Sharon or Dr. Saraswat if anything you want to add. Clinically, with visualization of the bed, but from a histological standpoint, that was something that was important for us to look at. And so we have that data as well as the clinical data that was presented out today that we'll be sharing.

I think the only thing for me is the time to definitive closure, that is the difference in that regard. And that may be related to closing that wound bed sooner. If you start to get skin or skin sub process followed by skin. I'm doing that faster at that day 3, day 4 of temporization versus I was using allograft, I was waiting a little longer. So I don't know if that contributes to it or not, but.

Appreciate that. And then just lastly, AVITA today and prior to today, has discussed with the investor community about RECELL, PermeaDerm and Cohealyx as an integrated acute wound care platform rather than stand-alone products. It sounds like that platform approach is resonating with both of you. But from today's presentation and in your remarks, but just want to double back on that and make sure I'm interpreting your comments correctly. And maybe just share with us how much buzz out there that you've heard from colleagues at other centers or even within your own centers about this RECELL, PermeaDerm, Cohealyx platform approach versus stand-alone products and how AVITA can continue the momentum here with this portfolio approach?

Dr. Sharon, do you want to lead off this time?

Absolutely. I have -- there are I'm not going to say I have converted 100% to Cohealyx as my every single time I need a skin sub, it's my go to. But I can say it is 85% of the time. And what do I mean by that? I think it is a great combination, PermeaDerm temporization, Cohealyx for skin sub, if there's any subcutaneous fat exposure and followed by skin graft and RECELL. And in that continuum, why do I choose to do that? It really just -- Cohealyx is somewhat incorporated into the wound bed about day 3. And I'm finding no later by day 8, day 9, I'm ready to put skin. So if I can temporize for 3 days, if there's any elements of fat, I put Cohealyx, I'm ready for skin grafting and definitive closure at worst-case scenario day 10, which, for me, you're talking about length of stay, definitive closure, improved scarring and contracture.

And the faster I can get somebody healed the better long-term outcomes are and getting patients out of the hospital. And the wound care for Cohealyx in my experience has been very easy for my staff. I have a protocol. We followed the protocol, it's not labor-intensive. It confirms to the wound bed. It makes axillas, necks, joint spaces, things that are like very difficult to get other skin subs to stick to -- it's fantastic, in my opinion. There are some wound beds that I don't put Cohealyx on but that's another conversation for another day, like contractual releases, for example.

But I think it is a great portfolio, a great overall wound augmentor sometimes may have to reapply. But I think any product does that. So it has -- I use -- I mean -- I don't -- done a lot of burn cases with all 3 and had a significant decreased length of stay overall since I transitioned to doing majority of Cohealyx.

And Dr. Saraswat, do you have anything that you would like to add?

I would just quickly add that almost all of us as a surgeon, we create some sort of pathway or algorithm in our mind depending on what type of burn we're dealing with. And there are so many factors that go into the characteristic of the burn, but the main thing is it a complex deeper burn or a large burn? Or is it like a simple burn where we can immediately go into allografting.

And so in terms of looking at the full complement of the portfolio that's available through AVITA, all 3 components would be something that we would thinking about our flow sheet or algorithm in terms of what are we trying to cover, we would use that the 3 distinct products kind of altogether and integrated within our workflow because it covers these complex wounds. The only time we want to temporize a wound is any number of reasons of why it would make it complex. It's a large TBSA, it's a deeper burn. We're not sure how viable the wound bed is. And usually, that's the case when it's a deeper burn. So the perimeter will help temporize it. And as Dr. Sharon said, we can then quickly turn around and apply a dermal substitute, which would be Cohealyx.

And Cohealyx is not a product that needs to stay on for 3 to 5 weeks, which is advertised with other dermal substitutes that are on the market. And then finally, RECELL. RECELL, we use for full rainbow of different issues for patients, but for the complex patient for the large TBSA. It's a very easy go-to for many people across the country. So I mean, in thinking about the type of wound that you would want to use each product for, you'll find that you kind of would use all 3 of them for the same type of patients.

Really appreciate those answers. Thank you.

Thank you. And that concludes the Q&A session. And this concludes the conference. Thank you for your participation. You may now disconnect.

Good morning, everyone, and thank you for joining the AVITA Medical quarterly Australian Webinar. I am Rudi Michelson of Monsoon Communications.

AVITA CFO, David O’Toole is in Australia for a Sydney-Melbourne roadshow this week and joining us from the U.S. is CEO, Cary Vance; and Vice President, Investor Relations and Corporate Communications, Ben Atkins.

This webinar has been arranged so everyone has the chance to be brief, direct and ask questions on AVITA's progress.

Now let me point out you can submit questions using the Q&A function, and we'll get to them after the presentation.

I'll now hand over to Cary Vance to begin the presentation.

Thank you, Rudi. Good morning, everyone. Welcome to this second quarter briefing. It's good to be with you again. I think it's important to note that the last few quarters that I've been in Australia, we've laid out the plan for the company. We've executed to that plan, and that continues today. So, I look forward to the conversation.

Next slide, please. And the next, please. So well, if you look there in Q4 of 2025, I took over in mid-October, and we talked about assessing the business, understanding it, stabilizing it, having an understanding of our customers why they buy, why they might not buy, the challenges that we have, any internal lack of efficiency and effectiveness, structurally, organizationally, and so on. So we did a number of things in Q4 to prepare us to achieve and be successful in 2026. As a result, Q1 had growth quarter-over-quarter at $19.3 million. And then this past quarter, second quarter, $21.7 million. We expect that to continue. We expect sequential growth quarter-over-quarter.

As you can see on the right side of this slide, we are growing across product lines. We are growing both in the U.S. and internationally. A lot of good things happening that, frankly, we expected to happen and we expect to continue. As a result of not only what we've achieved in the first half of the year, but in the manner in which we achieved it, felt very comfortable raising guidance to $86 million to $89 million and also expecting to receive -- or expecting to achieve cash flow breakeven by the end of this year and excited about that.

Next slide. David?

So good morning here in Australia. I'm going to go through a couple of these slides, and then I'll give it back to Cary to talk about some other interesting things that are going on in the business. As Cary indicated, we had $21.7 million in Q2 of 2026. That is a 13% increase over Q1 and it's the second sequential growth of revenue that we've had. Q4 of last year to Q1 of this year was, as you may remember, 9.7% and so we followed it up with a 13% growth rate from Q1 to Q2. Year-over-year, last quarter, we grew by 18%, the $18.4 million in Q2 of '25, which is, again, a very healthy growth from where we were just a year ago.

Gross margins are staying right where we like them to be. We'd like them to be maybe even a little bit higher, and we're doing everything we can to increase those margins even in light of the fact that we're growing our other products, which we share ASP with. We -- just to remind everyone, the ASP for Cohealyx is shared 50-50 between our partner, Stedical I mean Regenity. And then PermeaDerm, we share the ASP 60-40. So it does have an effect of decreasing our overall reported gross margin because the gross margin for RECELL is 86%. And so, we're looking for ways to increase our margins, but we don't see it being anywhere lower than this 82% to 83% gross margin rate.

Very proud of the fact that we're keeping operating expenses in line. As you may remember, in Q2 of 2025, we did a restructuring of our sales team. We also took some G&A costs out and so, right now, the run rate for operating expenses is around $24.5 million, and we see that continuing.

Another great metric is that our overall net loss is decreasing each quarter and significantly from 2025. We are down to a $7.7 million loss and that's almost a $3 million increase from where it was in Q1 of '26. Cash use, as I indicated last quarter would go down this quarter, and that's what happened. We were using -- we used about $9.9 million of cash in Q1, and we are down to $3.2 million in Q2 of '26. And that is going to continue to decrease until we cross over and start generating cash in the fourth quarter. Just real quickly. Cash balance was $11.1 million at the end of Q2.

Next slide. Well, Cary talked a little bit about the fact that we have increased our revenue guidance for the year. We're now -- we moved it up from $80 million to $85 million. Now it's at $86 million to $89 million. We do expect to have sequential growth in the third quarter. And then again, we expect sequential growth in the fourth quarter and we have a high degree of confidence that we can get to that 86% to 89% (sic) [ $86 million to $89 million ] range. I've talked a little bit about all of these already, the gross margin and the operating expense. And so, I think we'll just go to the next slide.

So to recap, we've increased our revenue guidance from $80 million to $85 million to $86 million to $89 million now. We are going to get to -- we expect to get to cash flow breakeven in Q4 of this year. We have enough cash on the balance sheet to get through to that very large milestone of getting to cash flow breakeven in the Q4. We're well within the new debt covenants that we did with Perceptive. Just as a reminder, we did the Perceptive debt agreement. We took out OrbiMed's debt facility. And the reason we did that was to reset the revenue covenants in that debt facility. As an example, the debt covenants -- or the revenue covenant for this year is $73 million. And so, you can see that we're well above that with the revenue guidance that we have at $86 million to $89 million.

We do have another $10 million that we can take from the Perceptive debt facility when we reach $85 million of trailing 12-month revenue. And with the new revenue guidance, you can see that, that's going to happen. It doesn't mean we're going to take it, but it does give us the flexibility if we so choose, we will reach that $85 million before that option expires in March of 2027.

I'll turn it back to Cary now.

Thanks. Next slide. So before I get here, I think what David is talking about there is the kind of stability that we are looking for as leaders of the company, but that investors are looking for too. I think permeated through all of that is a lack of distraction. If you look at taking care of our cash, keeping OpEx steady, keeping margins steady, stabilization of our people and retention, all of those things solving the reimbursement issues from last year. I think we'll look back in 2025 as a one-off of several headwinds as we indicated last year at the end and also a number of ways that we stabilize the business, keep very focused and we're all focused on growth. The only thing that's moving is the growth of our revenue and the adoption of our products.

I put this photo of this patient on here, I think, to remind us all that [indiscernible] reimbursement and all of those key drivers of our business and our guidance are patients that are benefiting from our technology. And we're extremely humble and driven by that mission. And I hope that anybody that invested in this company, aside from the kind of return you would expect from us that you feel good about contributing to this kind of good work in the world, including in Australia, which we're making some headway commercially there as well.

From a volume perspective, I think it's important for us to note that it's not just revenue that's growing in RECELL, but volume itself, volume of kits. It's also important that as we invested in RECELL GO that was part of the strategy to expand utilization to other types of wounds to smaller wounds. The way that you address expansion into those smaller wounds, #1 is education, education on economics, on clinical benefit. But also providing a technology that fits better to that type of wound treatment. And so, RECELL GO mini does that at a lower price point, smaller kits for those smaller wounds. And that's how it's being used. It's being used as we thought it would.

And I think it's important for us to maintain our humility and continue to look for ways to improve the business, but I also think it's gratifying to know that when you set a strategy, when you develop a product, and you set out to do something with it that it acts the way that you thought it would because it gives you confidence that as you do things like that going forward that you know how to do it well. And that's a good example of launching an ancillary product to our flagship in RECELL GO mini and having it perform the way you intended.

Obviously, last year and even beginning of this year, we talked all about reimbursement. If I were all of you, the way I would look at it is this 2 years ago, we got a CPT I code, and we thought this was going to be national across the country and it was just going to be put in place by CMS. CMS found it too complicated and wanted us and physicians to go back and simplify things. So, while they were doing that, they delegated the publishing of the rates and the adjudication of claims to those Medicare Administrative Contractors, the 7 MACs that we've been talking about forever. So the company struggled with those MACs to try and get them to publish, which they did very slowly over the course of the year. And that cost us some growth last year as a result of uncertainty in the market with physicians not feeling like they weren't sure if they were going to get paid. And if so, what they'd be paid.

So we finally got all of that figured out in Q1 of this year. And so, we see that type of stabilization with the MACs. People are getting paid. Things are good. And the even better news is that CMS just proposed and will be finalized end of October, November, that starting January 1, they will be handling the claims nationwide that the set of codes are simplified, as it says here on the slide, they've bundled the steps in the process, harvesting, preparation, application into one. Everything is very clear, transparent, predictable because obviously, money and the reimbursement drives it. But the confusion, the lack of clarity is the thing that probably disrupted it even more than the economics of it. And so, we're really excited. The physicians were involved in that process. The American Burn Association has told physicians. They've been talking about this whole concept.

So over the course of the next 4 months, we'll reiterate with those hospitals that this is going into effect January 1. They're expecting it. They're excited about it. And I think patients will benefit from it as well as AVITA in the process. Little things, though, too. I think it's pretty much the same rate. It's just very consistent, helps us with the outpatient market. But I think the fourth bullet on the left here, just a simple thing that makes sense and that is if you have a small [indiscernible] by size, a small wound on the belly, let's say, of a 4-year old. Well, that wound size is not particularly large, but as a percent of total body surface area on that 4-year old, it's quite large and quite impactful to that patient especially as they grow and the potential for scarring and a number of other things. They shifted that from a straight up size of the wound to a percentage of total body surface area, which makes complete sense. It drives the right behaviors with our clinicians for those young patients. And so, we're extremely happy about that.

Again, the reason why reimbursement matters the most is the consistency and transparency and predictability of it nationwide. The whole MAC thing goes away on January 1 and we'll benefit from that permanence going forward.

Next slide. Again, just a reminder that our portfolio has the ability to treat the same patient same -- with the same physicians, same hospital, very efficient. We're already in those cases. So selling additional products in our portfolio is very easy. It's the same conversation about a particular patient, what they might need. And oh, by the way, you may want to try another product from AVITA in the process. So while that patient can benefit from other products in our portfolio besides RECELL, the company can also benefit from a revenue standpoint on a kind of a per patient basis, per wound basis. And you can see that from this slide that if PermeaDerm, PermeaDerm plus RECELL, all 3 products used on the right-hand side, there's a multiple of revenue on that same patient that same incident.

And so, I mentioned last week in my remarks that 25 hospitals have now experienced using all 3 products. We're still early days in trying to -- for them developing synergies between the 3 products. Obviously, us getting through VAC, a number of hospitals right now. We're probably at that 35% to 40% range in terms of those that have gotten through VAC. We still have about 50 in VAC, about 10 to 15 of them per quarter are going through VAC, and then that gives us a license to compete and win business and grow that Cohealyx business as well.

Next slide. So what you see on the slide here is clinical data and clinical studies. Some of this -- the interim report for Cohealyx was released in April. We're going to have an interim report on PermeaDerm here this month. And of course, we have the RECELL data that came out with a 36% reduction of stay. So what do all 3 of these have in common? Really 2 things to me. Number one is speed. Speed to healing, speed to wound bed readiness, efficiency, length of stay, speed, speed, speed. And so, that's great for the patient. The patient gets treated sooner. The patient gets out of the hospital sooner, back home to their family, to their life, healed in all sorts of ways.

But also what's on this slide is money because time is money. And so, when patients are released earlier from the hospital, that's fewer days in acute care that a hospital has to care for that patient. If they're able to graft that patient and apply RECELL 20 days sooner, let's say, by using Cohealyx instead of the competition, that's real, that's 20 days of less pain, less dressing changes, less chance for infection, but also, again, sooner getting out of the hospital. And so -- and then PermeaDerm is really -- there's a lot of efficiencies around handling it, preparing it as opposed to allograft. But what you'll see from the data is that straight up, this saves them money with product that has better workflow and better transparency to monitor the wound bed. And so, we're excited about what's going to come out in the next week or so.

Next slide. Again, this is a summary slide. What I love about the company, and I think what's transpired over the last few quarters is that the company is simple. It doesn't mean it's easy, but it is simple. We have 3 products, high margin, consistent OpEx and a really talented, passionate team that has everything they need to compete every day, very underpenetrated. There's a lot of room to grow, not just in trauma, not just in small wounds, but even in large wounds in burn. New physicians, new wounds, different sizes and different types. There's a lot of room for our team to grow. We're very efficient. While we grow, we're not going to have to add a lot of people. We're not going to have to spend a lot more money. We're positioned to grow and being very disciplined in our operating mechanisms and really excited about the future. And again, when I reported out on Q2, the reason why I was most excited about it is not because of something that was accomplished. It was because of something that is happening.

This is a continually growing business. It grows on itself month after month, physician after physician and that bodes well for the future. That bodes well for revenue guidance, raising and for continued growth throughout the end of the year and into next year. And so, we're really excited.

Happy to take your questions if you have any at this time.

Thank you, Cary. We'll now move on to the Q&A. [Operator Instructions] And I'll now hand over to Ben Atkins to run the Q&A.

Thanks very much, Rudi, and thank you, Cary and David. So good morning, everybody. Welcome to the Q&A portion. So I have a few questions which have been submitted to us in advance. And as we -- the presentation has been going on, I believe we have a few questions that have come in live. So what I'll do is I'll start with a couple of the questions that came in advance and then we'll kind of intermix them as we go. So Cary, first question to you.

You've now delivered 2 consecutive quarters of sequential revenue growth. What gives you the confidence that the momentum you saw in Q2 can continue through the second half?

Well, thank you. It's a little bit about what I was just talking about. So I sit in a forecast call every week, and we talk by product, by account to a good degree, by region of the country, outside the country. We understand which physicians are using it, which ones are not. Those that aren't using it, why they're not. And so, we know, I think who we can count on to continue to use it or at a greater level. And so, I think understanding the business, understanding the levers, understanding the growth opportunities, the funnel, I think gives me the confidence to know that we're going to sustain what we have and build upon it. And that's the reason why I can confidently say we're going to continue to grow in the quarters ahead.

David, I'll put the next question to you. We've had a few questions actually regarding the sort of the cash flow breakeven. So I think this will help you capture it in one.

Cash use improved quite significantly in the quarter, and you're now targeting cash flow breakeven in Q4. What are the key things that need to go right between now and then to achieve that?

Yes. Thanks for the question, Ben. And there are a lot of factors that go into reaching cash flow breakeven. The easy ones are that you need to have your revenue get to the levels that we adjusted our guidance to. And so, the way we get to cash flow breakeven first and foremost is to reach our revenue goals of anywhere from $86 million to $89 million. We hope to be at the top end of that range. And so, that's the first one.

The second is to maintain operating expenses in the level that we're already at. We don't see the need to increase our operating expenses in the third and fourth quarter. So that is a major factor to get to that cash flow breakeven. And just a reminder on the operating expenses, which are at $24.5 million, there's a number of noncash items in that $24.5 million, including stock-based compensation and depreciation and amortization and other smaller noncash items.

And then the third item that you need is to continue the gross margin percentage in that 82% to 83% range. If there's mechanisms that we can use to increase that, we're looking at those, but we need to be in that 82% to 83% range for gross margin.

And then I guess I'll just say one last thing is that our accounts receivable team is very good at collecting cash, and collections of cash are very important, obviously, to get to that cash flow breakeven in the fourth quarter. Those would be the 4 items.

Thank you, David. Let me just make the observation in the chat that they're getting a bit of an echo in Australia. Obviously, I can't hear what you're hearing there, and I apologize if anyone is having some difficulty. But just to let you know that we will be publishing the webcast on our website where we -- it should have good sound. So if there are any problems, you can always come back to this in the days ahead.

Moving on to the next question. We've had a couple of questions before and actually just during the chat. Looking at how we're thinking about the expansion from burn into some of the areas of trauma. And I think they're sort of related here in this question. You mentioned that 25% cost -- Cary, you mentioned that 25 hospitals have now had experience with all 3 products. How should investors think about the opportunity to grow revenue within your existing 200 hospital base as adoption of the broader portfolio develops? And when will the company be looking to expand beyond that? And perhaps the second part to that question which is related is just sort of how we could be thinking about the move more into trauma as well as burn as well?

So it's a great question. It's a question I think about every day. I think if we just back up for a second and we say, what's important about this company is its ability to focus right now and execute where we are. We essentially have 2 new products that are still going through VAC. We also have RECELL GO, which is only a couple of years old that even though people love it, it's a new product that's out there. And I think we need to be careful not to scatter shot ourselves in the next couple of years.

Now that being said, what we have is a very talented, highly trusted relationship driven commercial team that has relationships with physicians and with hospitals, who understand the economics of the hospital, who can relate on an economic workflow and clinical -- from a clinical standpoint with all of those stakeholders. And so, on a day in, day out basis, they have trauma centers and burn centers and patients come in and they are treated in a number of different ways that wound is treated. And right now, within that continuum of care from when they come in to when they leave, we were at some key inflection points in terms of protecting and evaluating the wound by using PermeaDerm as a temporizer, Cohealyx that vascularizes and prepares the wound for grafting and then obviously, RECELL that plays a key role in either spraying on or spray plus mesh graft.

And so, it's crucial for healing, crucial for the economics of the hospital that those 3 products play such a key role in the healing of the patient, the speed and workflow that, that patient gets to healing and gets home and the economics of the hospital, the money that they can make and the money they can save. So that being said, if you look at ways that we can expand and expand into trauma, trauma wounds. A lot of them are different than burn wounds, but they're all wounds. So sometimes they vary in terms of their complexity, sometimes in terms of their size. And so, it's on us from a clinical standpoint, an education standpoint, a product standpoint, an economic standpoint to find ways to address the needs of those particular trauma surgeons, those particular types of wounds, and we're in the process of doing that.

It's not a one-size-fits-all. You don't just come up with RECELL GO mini and say, "Here, use that in trauma." It takes salesmanship. It takes thought and strategy and directed focus and conversations and listening and understanding the needs of the customers, the pain points and some of the resistance, frankly, that occurs in trying to do things differently. That's how we sell every day. We have a lot of work to do. We're extremely underpenetrated. So we have a lot of room to grow. And so, when I look at other types of products in the future, those other products would need to fit within certain guardrails. They would have to be -- we're very, I think, happy with our level of margin, and we want to keep that margin. That's really important to us. And so, that would be a key point, the call point from an efficiency standpoint.

We don't want to be all over the place calling in different types of hospitals, different types of doctors at any point in the near future. It needs to fit kind of the thesis and the mission of the company, which is the benefit of our customers, clinically, economically and from a workflow perspective. It needs to tick those boxes to kind of be melded into our portfolio. So again, all that being said, our people are very focused on execution. But I have the ability to pick my head up and say, what else is out there. We get approached, and so on.

So in the quarters and years ahead, we're not closed off to putting other products into the portfolio, but we're going to be very careful about how and when and why we do that, frankly.

Cary, we've had a couple of more questions related to growth. Firstly, with the U.S. and the second one on international. So let me go to the U.S. first. And a couple of questions that relates to the current penetration that we have in the burn market and what that could look like going forward. So to sort of phrase it what share do we believe we currently have of the U.S. burn market? And what do we think that could be potentially lifted to with RECELL?

Yes. I mean, right now, our evaluation of the burn market is we're at about 15%, and that's the burn market. I think the trauma is far less than that. And you take the whole portfolio, we're probably at about 5%. If you just look at all of our products, just a ton of room to grow even within burn, even within large wounds. And so, it's not just, well, we've got all the large burns handled. It's just small wounds now. No, it's all of the above, which, again, is a great opportunity and a great responsibility because not only is there a lot of business to go after and a lot of room to grow, but there are a lot of patients that are not getting in my view, the best care, which involves using RECELL. And so, it's on us and it's on our mission to get up every morning and convince people that this is a better way to go for them, for their hospital and most importantly, for their patients. So again, I think a lot of room to grow.

And looking at international, could you perhaps give a little bit of color on what you're seeing revenue-wise in the international markets? And as you think about the international markets, which are the sort of the key ones we have our eyes on for potential future growth?

Yes. I mean right now, we're in kind of 3 different stories. So if you look at Japan, we're fairly established there. It's a really strong health care market. We do a lot of business there. I think that there's room to grow there, but I think there's also opportunities for us to look at other indications, and so on. But we do really well in Japan. I think Australia while from a population standpoint, it's smaller, I think we're very underpenetrated, particularly in the East, Southeast of the country. And so, we've made some progress there. Just over the last few months since we got RECELL GO approval in Australia and New Zealand. We have a really good distribution team there that is making headway, and we have some champions forming in Melbourne and Brisbane and other areas of the East. And so, we're really excited.

It's -- we're 7 months in, in Europe, in the U.K. and in a handful of other countries with large dense populations with champions, with new distributors understanding the economics of each of those countries, even explaining and educating physicians who think well, RECELL is not reimbursed. Well, it is and in some cases, and we've had to tell people that in places like Germany, and so on. And so, obviously, those types of dense populations in health care systems have a great amount of potential. But I mean, I'm going to tell this group when I know something is going to happen in a particular place, at a particular time. And I'm going to tell you that we don't know yet. What we're trying to do is build a platform for growth, and that happens through champions through understanding the economics through educating people having great distributors who can do not only -- that can do a clinical sell and economic cell in [indiscernible] days there. And so, I guess more to come. And as we get more information about inroads we're making in certain countries in Europe or in the U.K., we'll definitely share with this group.

I got a question related to the products with Cohealyx and PermeaDerm, specifically, what future plans we have for any R&D with those 2 products? And I think you touched a little bit on the Cohealyx one and the PermeaDerm one study there, Cary. So maybe it's worth just sort of talking a little bit more about what we -- the data that we have coming up and the publications we plan? And -- just put a bit of color on those 2 topics.

Sure. So I'll answer the second part first, which is these 2 studies. So the interim data showed readiness to graft in Cohealyx 20 days sooner than the competition. Because what's important for this group to understand is that, yes, we've been talking about VAC committees and getting through the VAC committees. On the other side of that committees, there are other dermal matrices that we compete against. And it's important for us to have a clinical, economic advantage from a benefit standpoint. And so, that interim data showed that readiness to graft at 20 days sooner, which is substantial, not only for the patient, but again, for speed to healing speed to getting people out of the hospital and back home. There will be a 6-month follow-up to that data that shows the durability of the graft, how well it did and all of that.

So if you take the comfort and reliability of the graft itself and then the speed at which it vascularizes and prepares the wound bed, it's a great combination. We'll submit that for publication at the end of the year. It will publish next year, and we'll be able to have presentations at significant conferences as a result. That's Cohealyx. PermeaDerm again, in the next week or so, you'll see the initial data, which just basically says it's comparable to allograft or cadaver skin, comparable, and they can trust it in that way. But aside from trusting it in that way, from a clinical standpoint, what you see is handle, just a reminder to everybody that allograft and cadaver skin needs to be tracked, it needs to be frozen. It needs to be thawed and then it needs to be applied. And then once it's applied, you can't see through it.

Think about a product, think about if you had a Band-Aid and you had a wound under it and every time you want to see how it's doing, you have to lift up the Band-Aid. Well, it would be great to be able to see through it. So you could see how it's healing. That's what they want. That's what PermeaDerm is. It's transparent. As you're assessing the wound bed, you want something that's transparent. You want to be able to put it on the shelf and not have to put it in a freezer somewhere and then bring it over and thaw it and track it because it's human tissue. So the handleability.

And then just straight up the price. Somebody switches from allograft to PermeaDerm, they're going to save money every year just by switching. And so, I think that will be a part of the data that comes out initially and again submitted towards the end of the year, published next year. In terms of R&D in those 2 areas, we coordinate very closely with Stedical and with Regenity on potential next-gen enhancements. We think about it all the time. Again, we're selling what we've got. What we have is extremely beneficial from a clinical standpoint, but we're always looking for ways to improve it along with those companies, and we'll continue to do that, just like we do with RECELL.

Right. Okay. I think -- David, I think we've addressed the majority of questions which have been asked through. And I think, to everybody if there's anything that's specific we did not address, please reach out to us directly, and I'll do my best in subsequently to do so. But Cary, I think unless there are any further questions, I'll hand back to you for maybe any final thoughts, and we'll close it off after that.

Yes. I want to thank the team. I want to thank our team because this is really a company-wide effort, a lot of great people in every function, doing all the hard work and really being focused and driven in terms of the mission. I think -- I want to thank investors because it's been rough, it has been a rough 1.5 years. And I think that what I tried to do is come into the role and be honest with myself and encourage everyone at the company to be honest with ourselves so that we could solve any issues and solve if there's 20 small issues, it all adds up. And I think we did that. We're still in the process of doing that on a regular basis. We want to know how we can get better. I think as a result, we are getting better. I think it's showing in the numbers. It's showing in the discipline.

I think that will continue to happen. And as it happens, we gain confidence. And as we gain confidence, and are transparent with all of you, hopefully, we gain some credibility that what we've accomplished and what we said we're going to do will continue going forward. And if there's a time where we run into some bumps, we'll make sure that we're being transparent about that, too, because I think that's important because inevitably, things happen and you need to have confidence that a leadership team is not only mitigating those things and looking out for those things and trying to prevent those things. But if and when they happen, that you'll address them head on and be straightforward about it, and you can count on that going forward. So thank you all for your support.

Good day, and thank you for standing by. Welcome to the Evita Medical, Inc. Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.

To withdraw your question, please press star 1-1 again. be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ben Atkins, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you, Operator. Welcome to Avita Medical's second quarter 2026 earnings call. Joining me on today's call are Carrie Vance, President and Chief Executive Officer, and David O'Toole, Chief Financial Officer. Today's earnings release and presentation are available on our website at www.abitamedical.com under the Investor Relations section. Before we begin, I'd like to thank all of you for joining us. remind you that this call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results to differ materially from any expectations expressed or implied by the forward-looking statements. Please review our most recent filings with the SEC for comprehensive descriptions of the risk factors. Any forward-looking statements provided during this call are based on management's expectations as of today.

I will now turn the call over to Kerry. Good afternoon in the U.S. and good morning in Australia. Thank you for joining us. As you saw in our press release today, we delivered strong revenue growth in the second quarter of $21.7 million, up 18% year over year and 13% sequentially. As Aveda continues to expand in the U.S. and build its presence in key international markets, our results reflect the growing utility of our acute wound care portfolio, led by Resell and supported by Cohelix and Permioderm. In the U.S., resale generated $18.5 million in revenue during the second quarter, growing approximately 13% sequentially from the prior quarter. This growth reflected physician utilization following physician reimbursement stabilization together with increasing adoption of ResellGo Mini, which continues expanding use in smaller wounds. I'll add a little more color on resale later in my remarks.

Internationally, revenue from resale increased approximately 26% sequentially over the first quarter. We continue to commercialize ResaleGo following regulatory authorizations in Europe, the UK, Australia, and New Zealand. adoption bills, clinicians are also beginning to share their early clinical experience. During the quarter, the British Burn Association Annual Meeting featured the first UK clinical experience with ReselGo, reporting successful treatment of 17 patients while highlighting improved operating room workflow. While international revenue remains a smaller contributor today, these milestones continue building the foundation for long-term growth alongside our large U.S. opportunity. CoHelix generated $1.7 million, representing approximately 16% sequential growth. We're encouraged by the steady progress we're seeing as hospitals complete their value analysis committee or VAC reviews and begin incorporating CoHelix into clinical practice. We continue to maintain a healthy pipeline of approximately 55 active VAC reviews, with 10 to 15 reviews typically completed each quarter, driving a steady increase in ordering accounts.

The interim COHELIX-1 clinical data presented earlier this year supports those dynamics by providing hospitals and surgeons with comparative clinical evidence. The study demonstrated substantial faster time to skin graft readiness compared with leading dermal matrices, and later this year, we expect to submit the complete six-month follow-up data set for publication, providing additional evidence of long-term durability. PermiAdern generated $600,000 in revenue during the quarter. Commercial adoption remains in its early stages. We're encouraged by the initial response following our recent positioning of Permiaderm as a wound temporizer, providing clinicians with an alternative to Allograft to temporarily stabilize and protect the wound before definitive closure. To further support that positioning, we expect results from our PermiDerm-1 clinical study later this year. As a reminder, this post-market study evaluated Permioderm as a clinically comparable lower-cost alternative to Allograft.

Today, 25 hospitals have experience using all three Aveda products. Some are already regularly incorporating the full portfolio into clinical practice, while others are still evaluating where each product best fits within their treatment pathway. That's what we'd expect at this stage of adoption of our new products, and it gives us confidence in the opportunity to grow utilization of our full portfolio within our accounts. Since becoming CEO last October, my objective has been straightforward, to build a business that consistently delivers growth quarter over quarter, year over year, through disciplined commercial execution. Looking back over the first half of 2026, I believe we demonstrated that objective in action. We've delivered consecutive quarters of sequential growth, broadened adoption across our portfolio, and we continue to improve the financial profile of the company. That progress gives us greater confidence in where the business is headed, and today we're updating our outlook accordingly.

First, we're raising our full-year 2026 revenue guidance to a range of $86 million to $89 million, representing growth of 20% to 24% over 2025. Second, we're introducing new guidance to achieve cash flow breakeven and begin generating cash during the fourth quarter of 2026. Reaching that milestone is an important step in Avita's evolution. It reflects not only stronger revenue growth, but also the operating discipline and cash generation that David will discuss in more detail.

Thank you, Kerry. Good afternoon and in Australia, good morning. I will use my prepared remarks to look at how our strong commercial performance is flowing through the business. particularly across operating leverage, cash generation, and our path to cash flow breakeven. Turning to the financials on slide four, let me start with revenue. As Kerry indicated, revenue increased approximately 18% year-over-year and 13% sequentially from the first quarter to $21.7 million. crossing over $20 million in revenue for a quarter for the first time in our company history. With this sequential revenue growth for the second quarter and $41 million in revenue for the first six months of 2026, we are increasing our revenue guidance for 2026 from $80 million to $85 million to now $86 million to $89 million. This will represent growth for this year from the $71.6 million in revenue in 2025 in a range of approximately 20% to 24%. Turning to gross margin, gross margin increased to 81.9% compared to 81.2% in the prior year quarter and remained above 81% year to date despite continued growth in our newer products.

As we've discussed previously, while changes in product mix modestly impact reported gross margin percentage, CoHelix and Permiaderm contribute incremental gross profit without a proportional increase in operating expenses. Resale gross margin remained strong at approximately 86%. Resale growth provides a tailwind for reported gross margin that offsets the impact of product mix as CoHelix and Permiaderm become a larger part of the business. Now looking at operating expenses. Operating expenses were $24.6 million, essentially no change to the first quarter, at approximately 6% lower than in the same period in 2025. Importantly, this demonstrates the benefit of the commercial operating structure we established during the second quarter of 2025, capable of supporting continued commercial growth without requiring a corresponding increase in operating expenses. Looking ahead for the rest of 2026, we continue to identify opportunities to further reduce operating expenses while continuing to support our commercial priorities. This quarter, operating loss and net loss improved to $6.9 million and $7.7 million, respectively. compared to 11.1 million and 9.9 million, respectively in the same period last year.

The second quarter operating and net loss showed significant improvements from the quarterly losses we have generated in the past. Turning to cash, which remains one of our highest priorities. As we discussed during our first quarter call, we expected cash use to improve significantly during the second quarter as seasonal payments normalized, collections improved, and revenue continued to scale. That's exactly what happened. Net cash use improved to approximately $3.2 million during the quarter, representing a major improvement from the first quarter and from the quarterly cash burn each quarter last year. We ended the quarter with approximately $11.1 million in cash, cash equivalent, and market securities. As I look at the trajectory of our numbers indicated in the green boxes on this slide, I see a financial model performing as expected and in alignment with our growing revenues. As Kerry mentioned earlier, we are also introducing new guidance for our cash flow outlook.

That confidence of reaching cash flow break-even is supported by three financial trends that are now working together. illustrated here on slide five. First, revenue continues to scale. We've now delivered two consecutive corners of meaningful sequential growth, 9.7% and 13% respectively. and we've raised our full year revenue guidance. Second, we've maintained high gross margin above 81% while growing our portfolio over multiple quarters. Third, we've maintained disciplined control of operating expenses and optimized our cash conversion cycle. Essentially, we are spending less money to run the business and collecting cash faster from our operations. Taken together, those trends give us increasing confidence that Aveda is approaching an important financial inflection point. As the business continues to scale, we expect a further reduction in cash use during the third quarter before achieving cash flow breakeven and beginning to generate cash during the fourth quarter of 2026.

Turning to slide 6, our updated outlook reinforces our confidence that the balance sheet remains aligned with the next phase of the company's growth and funded through this transition to cash generation. We continue to operate well within the requirements of our credit facility, which was intentionally structured to support the business through this stage of commercial expansion. As revenue continues to build, the perceptive debt facility also provides access to an additional $10 million tranche once trailing 12-month revenue reaches $85 million. providing additional financial flexibility as we transition towards ASH generation. In summary, we're delivering commercial growth, maintaining strong gross margin, exercising control of operating expenses, and significantly reducing our use of cash. Together, those trends support our confidence in the increased revenue forecast we share today and our path towards cash generation. Today's results also reflect the strong execution across the organization. commercial operations, and corporate teams have worked together exceptionally well to scale the business while maintaining financial discipline. I'd like to thank everyone across Aveda for their commitment and execution during the first half of the year.

With that, I'll hand the call back to Kerry. Thanks, David.

Before we open the line for questions, I'd like to spend a few minutes on resale. It's the foundation of our business, and we continue to see encouraging progress in both physician utilization and the reimbursement framework that will support future growth. Following the transition of reimbursement across all seven Medicare administrative contractors, or MACs, physician utilization of resale continued to strengthen during the second quarter. Total U.S. resale volume increased more than 10% sequentially this quarter to over 2,600 units. We're also seeing a growth driver emerge through Resell Go Mini. As you can see on the right-hand side of the slide, 77% of Resell Go Mini procedures year-to-date were performed in wounds of 500 square centimeters or less. That's exactly what we designed Resell Go Mini to do, to expand Resell into smaller burn and trauma wounds.

We also view the increased volume in the second quarter as an encouraging indicator of the underlying physician demand for resell when reimbursement is stable and predictable. To that end, we are now entering the final stages of the transition to new Category 1 CPT codes for skin cell suspension autograph, or SCSA, the procedure term for resell. As a reminder, beginning January 1, 2027, the new Category 1 CPT code family for SCSA will replace today's multi-code structure. The current eight-code structure separates harvest, preparation, and application. This will be replaced by a simplified four-code family based on anatomic location and wound size. In July, within its proposed 2027 Medicare payment updates, the Centers for Medicare and Medicaid Services proposed nationally published Physician Relative Value Units for the new SCSA codes. We expect CMS to finalize the rule later this year.

If adopted as proposed from this coming January, physician reimbursement would transition from today's regional MAC contractor price methodology to a nationally published RVU framework, improving transparency and consistency for providers. Over time, we expect this to simplify reimbursement discussions, allowing our commercial team and customers to focus less on coding complexity and more on clinical adoption and patient care. As I step back and look at the quarter, I'm incredibly encouraged by what we're seeing in our numbers. Resale utilization is growing. Cohelix and behind it, Permiaderm, are gaining traction. Revenue continues to grow quarter after quarter, and we have a clear path to cash flow break-even by year-end. Those aren't isolated achievements. They're evidence that the business is operating the way we intended it to. As we look to the remainder of 2026, we'll continue executing with the same discipline that has brought us to this point.

Our priorities are clear. Continue expanding resale utilization. Continue growing adoption of CoHelix and PermiaDerm, and continue executing with commercial and financial discipline. As we continue to do those things effectively, we believe Aveda is well positioned to create long-term value for shareholders while helping more patients benefit from our technologies. Thank you for joining us today and for your continued support. Operator, we're now happy to take questions.

As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We stand by while we compile the Q&A roster. Our first question comes from Frank Takanan with Lake Street Capital Markets. Your line is open.

Great, thank you for taking the questions and congratulations on a really solid quarter. I was hoping to ask two questions. I'll ask them both up front and then hop back in queue to start on guidance, maybe walk through the key pieces behind the guidance increase. I heard the comments about ResoGo Mini doing well and recovery, maybe kind of parsing out which contributed more. And then secondly, as you think about reimbursement in 2027, how much of a challenge has the previous structure been, meaning maybe what portion of cases or adoption by site has been hung up because of the previous structure and maybe what do those new economics do to that? Thank you.

Thanks, Frank. Thanks for joining today. First of all, regarding guidance, it's fairly straightforward and simple. We're on a growth trajectory. And when we said guidance at the beginning of the year, there were some things that we knew and some things that we didn't. We set some pretty responsible guidance based on the trajectory we thought we would follow and we're on a higher trajectory. And so that's very clear to us now. I think we have eyes on the rest of the year. All of our customers, we've become very predictable in our forecasting, and so we feel it's appropriate to raise it at this time to something that we believe we'll achieve.

And then second, from a reimbursement standpoint, if you just take the numbers part aside, the biggest problem last year was confusion and the amount of time that it took from our salespeople and our customers to try and get a handle on if they were going to get paid, what they were going to get paid, and when. And so, We've resolved that as kind of a placeholder because that's what it was meant to be through the MACs over time by account. And so what this will do is it will simplify the codes, but it will also make it absolute nationwide. And so, as I said in my prepared remarks, it will move us from these – clarifying more complex discussions with our customers to to focus more on the clinical and economic benefits of the products. And so that will be very helpful to the efficiency and effectiveness of our sales team and I think our uptake on resale, which is still very underpenetrated in the market.

Thank you. Our next question comes from Ryan Zimmerman with U.S. Bancorp. BTIG, your line is open.

Hi, this is Jacqueline on for Ryan. Thank you for taking the questions. I was just wondering with the proposed 2027. is there any risk of a transitional air pocket as providers move from the 8 legacy codes to the 4 new standardized codes? And what's the internal plan to get ahead of that educationally.

Sure, so we've already begun communication with our teams who have started to communicate with our customers. So that is already starting, even though all of that will be finalized in late October, early November, that proposed change is likely. And because of that, we're starting to educate them already as to how this will change. and some of the associations that we're a part of are also educating their members. A lot of burn surgeons about the change as well. And so it's kind of a full-scale effort to make sure that a Everybody understands it very clearly by the time it hits January 1st.

Thank you. And then with the Co helix, 1 full data set previously expected in the end of 26 and favorable interim data already reported in April showing faster time to skin grafting readiness versus the leading competitive products. Can you confirm that the full data set timeline is still on track and what incremental information will.

add to further support back approvals and broader adoption? So we are still on track in terms of that timeline. The further data is just that there's follow-up data that's included as well that'll be part of that submission and publication.

Thank you. You're welcome. Thank you. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone. Again, that is star 1-1 to ask a question. question comes from Josh Jennings with TD Cowen your line is open.

Hi, good afternoon. Thanks for taking the question and congrats on a great quarter. It's John on for Josh. I just wanted to ask you quickly on adoption across all three products, specifically what you're hearing from your sales reps in the field. what feedback are they giving you at the physician level in terms of doctors using all three products, and how does this influence your pricing across your product portfolio? And just had a quick follow-up.

Well, I think the feedback from a clinical perspective is very strong. I believe that each of the products stand on their own, and the physicians have told us that in terms of their clinical effectiveness, but also the economic benefit that they see. It's still early days in them trying to figure out how... two or three of Avita's products, Permioderm, CoHelix, and Resel, how they, one plus one equals five or six in terms of synergies. but we're working together with them to make sure that's maximized. But very positive information. Some of our best customers are adopting all three technologies, and we expect that to continue going forward.

Okay, excellent. And then just in terms of pricing across the three individual units, certainly appreciate that resale is accretive at the gross margin line. Don't get me wrong, 85%, 86% gross margins are excellent at a product level. Is there anything you can do to keep improving that gross margin to potentially offset some of the dilution from cohelix and permeaderm.

Sure. So our operational team continues to look for efficiencies. on the back end of our business. So we'll continue to look for those, as well as our opportunity to maximize price in the marketplace. So that will be something that we'll continue to hold and try to expand going forward as we should. In terms of the other products, Co-Helix and Permuderm, Again, early days and trying to gain market penetration. We're always looking at price to make sure we're optimized there. So we'll continue to do that.

Excellent. Thank you, John. Thank you. I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Hello, and welcome to the 2026 Annual Meeting of Stockholders of AVITA Medical, Inc. Please note that today's meeting is being recorded. [Operator Instructions] Following the formal meeting, there will be a question-and-answer session addressing questions strictly related to today's meeting. You may submit questions at any time by clicking on the Message icon.

It is now my pleasure to hand today's meeting over to Jan Stern Reed, Chair of AVITA Medical's Board of Directors.

Thank you, Ryan. Good afternoon, and welcome to the 2026 Annual Stockholders Meeting of AVITA Medical, Inc. It is 3:00 p.m. Pacific Daylight Time on June 3, 2026 and 8 a.m. Australian Eastern Standard Time on June 4, 2026, and the meeting will now come to order. Please note that today's meeting is being held exclusively by way of live webcast with no physical meeting location.

I point you to the agenda for today's meeting in the Meeting Documents section of the virtual meeting portal. This annual meeting is being conducted in accordance with the company's bylaws and the written notice provided to all stockholders. And for a smooth and efficient meeting, we kindly ask all participants to follow along with the agenda and to abide by the guidelines provided for today's meeting.

Pursuant to our bylaws, you may submit pertinent questions at any time during today's meeting by using the field provided on the virtual meeting portal. Questions related to today's meeting content will be addressed during the Q&A session after we conclude the formal business of the meeting.

Allow me to thank you on behalf of our Board of Directors for attending today's meeting and for your continued support of the company. I am pleased to introduce our directors attending today's meeting, including myself as Chair of the Board; Cary Vance, Chief Executive Officer; Professor Suzanne Crowe, Jeremy Curnock-Cook, Robert McNamara, Dr. Michael Tarnoff and Joseph Woody. Also present are our executive officers, David O'Toole, the company's Chief Financial Officer; and Nicole Kelsey, Chief Legal and Compliance Officer and Corporate Secretary.

In accordance with our bylaws, I will preside over today's meeting and Nicole Kelsey will serve as the Secretary of this meeting.

Also in event today are representatives from Grant Thornton LLP, our independent registered public accounting firm as well as representatives from Computershare Limited, our U.S. transfer agent and Computershare Investor Services Limited, our share registry for shares held in the form of CDIs on the Australian Securities Exchange.

Before we move into the formal business of today's meeting, I'll ask Nicole to confirm that proper notice of this annual meeting has been given to all stockholders.

Thanks, Jan. The Board set April 9, 2026, is the record date for this annual meeting. I confirm that the company has received affidavits attesting to proper notice and the availability of proxy materials to all stockholders.

Additionally, an annual report on Form 10-K for the fiscal year ended December 31, 2025, including certified financial statements, has been made available to all stockholders entitled to vote at today's meeting.

Thank you, Nicole. With proper notice confirmed, I will now formally appoint the Inspector of Elections. Brian Heffernan of Computershare Limited is serving as our Independent Inspector of Elections for this meeting.

The list of holders of record of the company's common stock -- sorry about that. Bear with me. Okay. The list of the holders of -- the list of holders of record of the company's common stock as of the record date has been prepared. For the duration of today's meeting, this list of stockholders will be available for inspection by any stockholder of record upon request.

Nicole, please provide your report on the number of shares represented at the meeting, so we may formally establish quorum.

Sure thing, Jan. I hereby confirm that as of the record date, there were a total of 30,776,689 shares of common stock, which includes the underlying shares of common stock represented by CDIs listed on the Australian Stock Exchange that were outstanding and entitled to vote as of that record date. The Inspector of Elections has confirmed that proxies representing more than 50% of such shares entitled to vote at today's meeting have been received. Therefore, a quorum is present.

Great. Thank you, Nicole. With a quorum established, we can now proceed to the formal presentation and consideration of the proposals described in our proxy statement.

We have the following proposals presented for your consideration. Proposal 1, election of Directors. Proposal 2, ratification of appointment of our independent registered public accounting firm, Grant Thornton. Proposal 3, approval of an increase to the Non-Executive Director cash fee pool. Proposals 4 through 11, approval of equity awards to Non-Executive Directors pursuant to ASX Listing Rule 10.11. Proposal 12, advisory vote on executive compensation known in the U.S. as the Say-on-Pay proposal. Proposal 13, advisory vote on the frequency of Say-on-Pay proposals. Proposal 14, approval of the issuance of warrants to prospective Credit Holdings LP. Proposal 15, approval by way of special resolution of an increase to the placement capacity of the company for purposes of ASX Listing Rule 7.18.

The Board of Directors recommends a vote for all of the nominees listed in Proposal 1 and a vote for Proposals 2 through 15, except for their respective personal interests and a proposal causes them to abstain. For example, on a vote regarding their own fiscal year '26 annual equity award.

No other business has been properly presented for consideration at this meeting as required by our bylaws. The polls for voting are now open. For holders of common stock. If you have already voted by proxy, you do not need to vote again unless you wish to change your vote. However, if you have not yet submitted a proxy and wish to vote on these matters, please take a moment now to complete voting via the virtual meeting portal. CDI holders have previously submitted their voting instructions.

[Voting]

Now that everyone has had the opportunity to vote, the polls are now closed. Nicole, can you please provide the preliminary voting results at this time?

Sure thing. As Secretary, I can confirm that as of 12:00 noon Pacific Time today, all 15 proposals received the requisite for votes to pass in this year's meeting.

Great. Thank you. The Inspector of Elections will tabulate the final votes, and the final voting results will be announced through a Form 8-K filing with the U.S. Securities and Exchange Commission, immediately followed by a corresponding lodgement on the Australian Securities Exchange promptly following the close of this meeting.

Thank you for attending today's meeting. The formal portion of our Annual Stockholders' Meeting is now adjourned. We encourage all interested shareholders to review Cary Vance's recent armchair chat available in the Events and Presentations section of our Investor Relations site at ir.avitamedical.com.

We now invite your questions related strictly to matters covered in today's meeting. Please submit questions via the virtual meeting portal.

Jan, I can confirm that there have been no questions submitted through the virtual meeting portal.

Okay. This concludes AVITA Medical's 2026 Annual Stockholders Meeting. Thank you again for your participation today and for your ongoing support of AVITA Medical.

This concludes the meeting. You may now disconnect.

Good morning and thank you for joining this AVITA Medical Quarterly Australian Webinar. I'm Rudi Michelson of Monsoon Communications. AVITA CEO, Cary Vance; CFO, David O'Toole; and Ben Atkins, VP, Investor Relations and Corporate Communications, in Australia this week for Brisbane, Sydney, Melbourne roadshow. And this webinar has been arranged, so everyone has the chance to be brief, direct and ask questions on AVITA's progress.

Now let me point out, you can submit questions using the Q&A function, and we'll try and get to them after the presentation.

I'll now hand over to Cary Vance to begin the presentation.

Thank you, Rudi. It's good to be with you. I appreciate you hosting this event. Let me just start, please, with going back a couple of quarters. I think it's really important to hold the company, myself accountable for what we say each quarter. And that's a culture that's culturally how we run the company and how we expect to communicate externally as well.

In November, after being in the role for a few weeks, I came to Australia and I said, I need to get my hand -- get a handle on the business to really understand it at a deep level, where our opportunities are, where our gaps are so that we can solve those things by the end of the year and really be prepared for growth in 2026.

When I came back in February, I reported back to you that we had done those things, that I had done those things that I really felt like I understood the business, that we've changed a number of things operationally over that period of time that I had a pulse on the commercial aspect of the business, the people, how we forecast, how we expect we're going to grow going forward, the issues in front of us around reimbursement and around the speed at which we get through VAC committees, et cetera.

And so our cost, our OpEx, everything. And so I told you in February that based on what I knew, based on the guidance we had set, based on the trajectory I felt that we are on, that we were going to have a strong 2026 with sequential growth quarter after quarter. With the baseline of that $17.6 million in Q4 of 2025. Now, as I report back to you on a $19.3 million revenue Q1, I'm reporting back that, that growth has begun again. My prediction and my intent is to grow sequentially quarter-over-quarter this year so that the company regains a lot of its credibility that I think we lost last year to a good degree and also obtain and regain some of the excitement over the potential the company has to grow in all aspects of our portfolio.

What you can expect to hear from me in August is that that growth trajectory has continued and that it will continue. So I feel really good about the business. I was named permanent CEO a couple of weeks ago. Again, part of that stabilization and building back the company. I think by the end of 2026, we'll look back on '25 as having a number of external headwinds, a number of things that kind of slowed our growth trajectory and that it's kind of a one-off year in that respect and that we're back on track.

So let me just talk to you about a few of the things that have occurred over the past quarter of note. Like I said, number one, we're about revenue growth on all of our products, and we went from $17.6 million to $10.3 million (sic) [ $19.3 mllion ]. So there were a few highlights in the quarter. One was the BARDA contract. And so I want to make sure you understand what that is and what that isn't. So that $25.5 million is a big number.

Now that $25 million over 10 years is only realized if something bad happens at scale in the U.S., which, again, over 10 years could certainly occur. We obviously hope that it doesn't, but we're an acute wound care business. And so while we never want bad things to happen to individuals or to many people all at once, we are gratified to know that our products will help them in that time of need and that our business will benefit from those products being used.

So if something happens, they have kind of first right on our safety stock. It doesn't require us to do anything extra, any extra costs associated. We have a safety stock and we just rotate that, and that's what we use as being available for BARDA for that contract. What we are guaranteed is a regular administrative amount of revenue on a monthly basis, which you can generally calculate at about $100,000 a quarter for the next 10 years. And so that's what you can expect.

I think moreover, other than the dollars is that it's a great validation by the U.S. government and the burn and trauma surgeons that they coordinate with that RECELL is a crucial part of the planning for disaster relief and for treating patients should that kind of event occur. And so that's great for us from a -- just from a marketing standpoint and from a validation standpoint clinically. Our Cohealyx I interim data, again, this is a post-market study. What's great about it is that we're able to speak about it on an interim basis before we submit that data at the end of the year, and it's published early next year.

And essentially, the endpoint for that clinical study is speed to grafting. And speed and speed to healing and speed to grafting is the key going forward, not just now, but in the years to come. Hospitals and clinicians want patients to heal faster for their benefit and for the economic benefit of the hospital itself because it costs quite a bit of money to take care of them.

So if you look at the RECELL 36% sooner out of the hospital, reducing length of stay. And you add to that a Cohealyx readiness to graft, which is up to 20 days sooner, so in a week or so as opposed to 3 weeks or so, 3 or 4 weeks with some of the competition, it's a big deal for them. And it's for the patient themselves, you think about that 20-day difference between Cohealyx and some of our competitors, that's 20 days less pain, 20 days less dressing changes, 20 days less chance of infection. And so really powerful, I think, interim data that we've shared.

I would encourage any of you to go on our website and watch or listen to the webinar that we did at the American Burn Association Conference. We released some of that data. We talked about some of it with our medical affairs person, Dr. Katie Busch, but then we had 2 physicians there that talked about real world, how are they incorporating Cohealyx in their standard of care and investors and analysts were able to ask questions. And so I think it was extremely powerful to hear their perspective on it. So it's on our website. I would encourage you to listen into that again.

RECELL GO was cleared in Australia and New Zealand here close to home. We feel really good about our distributor here in Australia. Just great relationships, aggressive, smart. And now with RECELL GO approval, really have an opportunity to use that to expand the business here and grow the business. We also have a physician who moved from the U.S. who was a heavy RECELL user. She moved to the Alfred in Melbourne here. And so she's already done 3 cases here in the first month that she's been here. So I think there's a lot of momentum in Australia around RECELL and around AVITA, which is great.

And then finally, just American Burn Association in April, we had a great presence, a great buzz. We're seen as an innovator in the space. And it was great that Dr. Fiona Wood was there. She received a Lifetime Achievement Award at the American Burn Association. She was on podium. She was in the booth. She was stopped in the hallway. People wanted their picture taken with her and so on. So it was an extremely proud moment for us to have our founder there to have -- for her as well to see where this product and where this company has gone. And so just a great presence and a great impact at the American Burn Association Conference last month.

We've talked for a year about the MACs, the Medicare Administrative Contractors and how they took over the payment for physicians on RECELL and how they kind of dropped the ball and didn't publish those rates and weren't paying. That's all been resolved. All 7 MACs have published. All the rates are consistent, and they're making those payments. And they've made payments in -- going back as well that should have been made in the past.

And so that's -- our physicians are happy with that. I think for now, what we -- we're doing the usual work of going hospital by hospital, making sure that coders and physicians are aware of, a, they've been published; and b, is there a correct way of doing that? And is there anything we can do to help resolve that? Because we're kind of arm's length away from it, but we do have health care economics people in the field that now are kind of hospital by hospital, making sure we're optimizing the situation.

This is what I talked about 6 months ago. I talked about all the headwinds that the company was experiencing VAC committees and the MAC and the sales force changes in April that was a disruption. If you take all three of those things, what I said at the time was those are headwinds that are kind of keeping us from taking off, and they would turn into tailwinds. If you go back, that's the verbiage I used. That's what's happening. So right now, these payments happening with physicians, that's a great thing for us. They make more money if they use RECELL. Before they were making nothing if they use RECELL because of the problem. Now they're making more. And so again, that tailwind has turned into a -- or that headwind has turned into a tailwind.

The same thing goes with the VACs. It's kind of a slog through the VACs for Cohealyx and for PermeaDerm, but especially for Cohealyx. But once it comes out of VAC, you have that champion that put it into the VAC who's now championing commercial adoption and utilization of Cohealyx. Again, another tailwind that was a headwind.

And even the sales force optimization. So kind of changing and rejiggering the sales force, taking the opportunity to keep the best and to cut the average, let's say. And now that sales force with the great relationships and the great talent that they have fully staffed is really starting to pay dividends around growth. And again, you see that a bit in the numbers for Q1, and you'll continue to see that.

Again, this is the Cohealyx I study, some of the details around what I already talked about, on average, 33 days for our competitors, readiness to grafting versus 13 days for Cohealyx as little as 5 days. And on average, kind of that 1.5 weeks or so. You have a couple of quotes here from Dr. Bell and Dr. Castañón. Those are the 2 physicians that were on that webinar at ABA that, again, I encourage you to listen to that.

But an extremely valuable competitive dynamic there for us in a competitive space. Think about our business and our portfolio that we're used to competing with RECELL, which is basically competing against the way they've been grafting for 100 years. Don't do things the way they've been done for that long, do it with RECELL. It's economically beneficial, clinically beneficial, all of that. That's been the way we've sold in the past.

Now we're a little bit more conventional when it comes to Cohealyx and PermeaDerm, where we have competitors, worthy competitors that we have to have a value proposition that resonates. And the economic proposition here that this reduction in time represents is real as well as obviously workflow in terms of the readiness, the quality of the wound bed and the vascularization in terms of how it will accept that graft, how well the patient will heal. And again, how soon the patient can leave the hospital. And as part of that continuum, this wound bed preparation is a lot of times the thing that holds everything up. And so us being able to graft sooner is a major thing.

Let me pass it over to David to just take us through this financial side, please.

Very thanks, and good day to everyone. Nice to be back here in Melbourne again. As Cary mentioned, we had a very strong first quarter, $19.3 million. That compares to $17.6 million in the Q4, roughly a 10% increase sequentially. Even comparing that to Q1 of 2025, that was about a 4% increase.

And comparing the revenue -- the quality of the revenue this quarter versus the quality of the revenue in the first quarter of 2025, it's not necessarily comparing apples-to-apples. We had some bulk ordering that was taking place in the first half of 2025. That is not happening any longer. This is all organic growth. And it represents really, in my mind, a high watermark for revenue in the company. We did have a larger revenue at $19.4 million back in Q3 of 2024. But again, not necessarily apples-to-apples. And we see that over the next 3 quarters at $19.3 million, we're going to grow that sequentially.

Looking at gross profit margin, we're right at 82%. I expect that to stay there over time. We are at 85% gross margin for RECELL only. And then we have some degradation of the gross margin because of PermeaDerm and Cohealyx because we do the ASP sharing that we've talked about previously, a 60-40 split with PermeaDerm with our partner, Stedical and then a 50-50 split with our partner, Regenity with Cohealyx. And as those products become more impactful, the gross margin will decrease. But we don't see it going below 80% for the simple reason that we think that RECELL is going to grow even faster than the Cohealyx and PermeaDerm. And as we do that, that 85% on RECELL will offset the degradation you get from the other 2 products.

Operating expenses, still very cost disciplined. We did some restructuring, as Cary mentioned, around the sales force last year, about a year from now in 2025. And we took out about $2.5 million, not only in sales, but in some other OpEx. And you can see that, that's where we're tracking now. We're at $24.5 million in operating expenses, down significantly from Q1 of 2025 and pretty steady state to Q4 of 2025. We believe that, that OpEx will stay in that range.

Don't see that we need to add headcount. We will be opportunistic. If there is a sales force expansion some place that we need another sales rep, we will do that as long as there's a business case, we're adding another one. But we're at a good place from our OpEx, and we don't need to increase that over the next 12 to 18 months.

We did talk a little bit about cash. It's not on this slide, but I do want to mention it. We have $14.3 million of cash at the end of the quarter. We did burn more cash than we expected in the first quarter. I had mentioned in February that we expected that we were going to burn more. It was actually more than I thought it was going to be, primarily because of the fact that we had a slow January. And our cash collections are based on DSO days outstanding of 40 to 45 days. And since we don't -- we only collect, say, the first 45, 50 days of the quarter, if we don't have a strong first month, our cash collections are negatively impacted.

That is going to reverse in Q2. We are not going to have the onetime compensation costs that we had in the first quarter. And we had a very strong revenue in March -- February and March. And the demand and sales activity in April and early May have shown that, that momentum is going to continue, which will make our cash receipts for the second quarter to a point where we will burn significantly less cash than we did in the first quarter.

I do want to state that we reinforced our revenue guidance of $80 million to $85 million. That's what we had set last -- in the first part of the year, and we're -- we restated that guidance at this point.

I'll answer some of the other questions during question and answer, but I'll push it back to Cary for his closing remarks.

Thank you, David. Again, I just want to reiterate what I feel is important at the company, and that is that we have stabilized things. We understand this business. We understand our customers, how they buy, how they use the products. We have a very clear, simple, understandable strategy for growing the business. And that is that we have a very focused number of accounts, burn centers, Level 1 trauma centers. We have -- each of our reps in the U.S., for example, have just a few accounts. They're in there every day. They're in the OR. They have relationships, trusted relationships with physicians. They're selling broader and deeper. So they're getting physicians to use it on different types of cases.

We're only about 20%, 22% penetrated in RECELL, and that means smaller wounds, and we have RECELL GO mini. We have economic data that should be convincing to these physicians to use it more often. We also have physicians that don't use it. And I know and we know and we've found out exactly why each one of those doesn't use it. And that's where salesmanship starts. You go to the reasons why they are objecting to using it or using it more often and you address those. You address those through education, through peer pressure, through technology, through data. And so we're in the process of doing that.

Also, we've got pull-through on Cohealyx and PermeaDerm. So we have Cohealyx I, PermeaDerm-I that shows readiness to grafting, shows economic data that shows cost savings by using the products. And so we'll be pulling through both those products while we're expanding RECELL and we will be, like I said, growing quarter-over-quarter predictably and substantially and -- which should be, I think, comforting and exciting to investors going forward.

And so with that, let me turn it over to Ben to take questions, and we're happy to answer them.

Great. Thank you, Cary. Hope everyone can hear me all right. It's great to be here. Great to be with all of you on the line. We've had a number of questions submitted to us in advance. And I'm going to go through these questions in order, and I will read them out as they have been submitted to us.

So Cary, I'll put the first question to you. Could you help us understand who the primary customer is for the RECELL suite of products in the U.S. market and how that shapes the commercial growth opportunity?

Sure. Thanks, Ben. And I just kind of mentioned that. But first of all, I want all of you to know I've spent a lot of time in hospitals as a salesman, as a sales manager, as an executive over the years. So I understand hospitals, how they work, what pain points there are, what drives behavior, number one. Number two, I've spent a good amount of time over the last 6 months in hospitals with our reps, with our customers, understanding the workflow, understanding their transparent feedback about why they like it, what impediments there are and so on.

And so those people that we sell to are number one, I think, clinically, trauma surgeons, burn surgeons and their staff. The staff is really important from a workflow perspective and getting them on board and getting them trained and creating awareness. But there's also the department directors that, again, understand the logistics of it and the financials of it. You have buyers. You have administration.

So we talk to all of those people because they're all involved in the decision-making, the clinical decision, the economic decision of the products that they use. And so understanding who those champions are, understanding who makes the decisions in an account is extremely important. And so those are the people that we talk to every day, and those are the people we need to understand if we're really going to make a difference.

Moving to the second question, which actually is really three questions in one relating firstly to revenue by product, second to utilization, and third, related to data in relation to our pricing. But I'll start with the first part, which is on revenue by product. Would the company consider breaking out revenue by product segment, so investors can better track which products are gaining traction?

Yes. I think at some point, we will. I think, number one, the amount of revenue from that product needs to become -- needs to be a material amount to make it worth doing. I think that will come in the quarters ahead. So more to come on that. And then just quite transparently, we need to understand more about it, too. So for example, with Cohealyx, we have products that have gone through VAC. They've come out of VAC. They -- that kind of gives us the opportunity to compete. And so we have to get on contract. Once we're on contract, we have to get them to use our product more than the other products.

And so 1 quarter in, 2 quarters in, seeing that change from quarter-to-quarter. Every week, I go through the forecasting. We do account by account, by region, by territory, who's buying what, who's -- what's in the funnel around Cohealyx, what's coming out of VAC, how much are they going to buy, all of that. So we're internally in that. And so my comfort level with understanding it, frankly, if I told you I understand it perfectly, I wouldn't be credible.

We continue to understand Cohealyx, understand how they're buying it, where they're using it, where we expect them to use it. And so in subsequent quarters, when the revenue becomes more material and where we understand it so that we can consistently communicate that to you about how it's progressing, how people are using it, how we expect it to continue to climb. I mean just generally, we plan on that number going up. But the precision at which we can predict that and communicate that will be better in subsequent quarters. So that's a long way of saying not yet.

Related to that, does that plan also include disclosing procedure volume data over time?

Yes. I don't think we won't get into procedure volumes. I mean I know what they are. And one of the corporate goals that we have and one of the internal strategies and things that we talk about every week is utilization. So what happens before revenue is utilization. We want everybody to use the products and the revenue will follow. And so what we track is which physicians are using which products and for what types of procedure, what types of wounds, how many kits did they use? How much -- how large was the total body surface area burn, for example?

And so that's an internal metric that we kind of by account, by physician that we track and we push and we drive and we use modeling. We don't just use the reps and their relationships and their communication. We also use modeling tools through our sales operations team. We use -- which incorporates AI as well to understand where the business is, where they should be focused, how they should be expanding, what we're missing. So I think investors can rest assured that we are driving that type of thing internally that these are key KPIs for us. But at least in the near term, we're just -- we're not sharing procedure data externally.

The final part of the question was given that studies demonstrate meaningful cost savings and superior patient outcomes, does that give a better pricing power in negotiations with hospitals and payers?

Yes. I mean whenever you look at competing and competitive advantage or powerful data, how do you use that? You use that to get market penetration. You use that to get higher demand. And if you can get price, you get price. I mean we take price every time we can in any product line. And you balance that with the ability to penetrate from a market perspective and what the competition is and what the value prop is. So if you're more expensive, but you're more valuable, you can get away with that.

Of course, all of those dynamics and price elasticity, and we look at that every day, and we're early days here. So while we have really valuable data that we think will help us in the marketplace, we have to decide on a regular basis, especially early days, how much price we can take, how much market penetration that will give us, along with the data. We're the new guys on the block in dermal matrix, for example. We're the small guys. And so you balance all of that, the relationships we have.

We also have relationships with RECELL and we leverage that. So yes, we look at pricing. We will take pricing any and every day we can, but there are a lot of other things to balance in the competitive framework that we have on a regular basis, especially in early days. So it's a great point to bring up. There's no doubt that we want to expand our margins if we can. But we also want to expand our growth. We want to expand our market share. And so we'll balance all those things going forward.

Going into a slightly separate topic now on the MACs. Now that all 7 MACs have published payment rates, are there still any historical unpaid or disputed claims that are sitting with the hospitals? And what visibility do you have in those being cleared? What is the company doing to support hospitals through that process?

Sure. So I mean we help where we can because we have field-based health care economics market access people that communicate with hospitals directly, with the coders, with administration and with the physicians to help make sure that they're coding properly, that they get paid. And we have to be kind of arm's length, but we have to educate wherever we can.

In terms of them getting back payments and adjudicating past claims, the anecdotal data that we get is that they are being cleared up. They are getting paid, but we're not really involved in that other than, again, educating them and making sure they have the proper codes. And so we're not directly involved, but we do support them however we can. And the information we get back is that those things are being handled retroactively.

I'll ask a question initially on Cohealyx and then in a moment, we'll get to the financial position and a question for David. But before we get there, on the Cohealyx and the VAC process, of the approximately 200 target centers, how many have Cohealyx gone through the Value Analysis Committee process so far? And what proportion are currently being served? And in addition to that, how does the total addressable opportunity compare to where things stood in November of 2025 related to Cohealyx?

Yes. So first of all, the TAM or total addressable market in Cohealyx is unchanged from November. We continue to assess that as we move along. So we'll continue to assess that and update that up or down wherever. We want to make sure we're accurate. We're not just throwing numbers out there.

In terms of Cohealyx and VAC and progress, of the 200, let's say, it's -- there's about 56 in VAC right now, about 33 have come out of VAC. And so you probably have a little bit more than the 33 that even though they're in VAC, they're buying evaluation product and so on. So it's a really good flow. We have -- it's a really good pipeline. We have 56. We've had 56 pretty much for the last 9 months, but it's not the same 56. So every time 12 to 15 of them come out in the quarter, which has happened in the last couple of quarters, that's how you get to the 33. There's 15 to 30 that have backfilled those. And so if you do the math, 56 and 33, it's about half of those 200 or more are -- have either -- are either in VAC or have come out of VAC. And so that's kind of the proportion now, and we'll continue to update you on that kind of quarter-over-quarter.

David, a question for you regarding the financial position and path to breakeven. Again, two parts to this. Does the company have sufficient cash runway to reach cash flow breakeven? And before you give the answer, perhaps the second question because it's related, at what quarterly revenue level do you expect to reach operating cash flow breakeven? And based on the current trajectory and cost structure, when do you anticipate reaching that milestone?

Thanks, Ben, and thanks for reading both of those questions because I think it's -- they are related. And we've talked about this a number of times. Our cash -- our operating expenses are pretty stable. The one variable is commissions expense. And if commissions expense go up, then obviously, our revenue is going to go up also. But in general, operating expenses are going to be in that $24 million, $25 million range. Of that, $3 million is considered noncash. So we're in the $22 million range of cash out the door.

We are not giving actual guidance on when we're going to cross over. But you can see that if we grow the revenue sequentially from the $19.3 million, and you can pick a number of what you think the sequential growth would be. And if it's 5% to 10% or something like that, you can come to the calculation on when we do cross over cash flow breakeven. We're not far from it given that our cash expenses are in the range of $22 million, and we're generating $19.3 million, 85% gross margin. We just have to grow that revenue sequentially quarterly for the next few quarters, and we'll get to that point.

The first question was, do we have enough cash to get to that point of cash flow breakeven? The simple answer, in our opinion, is yes. We have $14.3 million on the balance sheet. The cash burn is going to be dramatically less this quarter. And as we grow revenue, that cash burn is going to continue to decrease over the next few quarters.

Would we like to have additional cash on the balance sheet as a small company? The answer is yes. And we're going to address that at some point this summer, if necessary. But I'm confident, Cary is confident, the Board is confident that we can run the business with the cash we have right now, and there is no concerns about having enough cash to get to cash flow breakeven.

David, while we've been presenting a few questions have come in on the Q&A. And I thought to bring you, kind of addressed this question around whether or not with future cash and the potential to raise, but I'll ask the question so that we acknowledge it. Recently, the company has registered a shelf. And the question is, can you clarify current thinking on whether additional equity capital will be required to fund operations through to cash flow breakeven?

Yes, I kind of answered that question, Ben. But I'll answer the question around the shelf registration. And the shelf registration in the United States, which is different than here in Australia, every company can put a registration shelf up. It's called an S3. It doesn't mean that we're going to raise cash. It means we have the flexibility and opportunity to take shares off that shelf any time we want, subject to ASX rules, subject to NASDAQ rules, and we could raise additional cash by using that shelf registration.

If you didn't have that shelf registration in the United States, you would have to actually file a registration statement every time you wanted to raise cash. And that is a very disruptive sort of process. And so this is a way to have flexibility in case we do need to raise additional cash. I believe at this point in time, like I said, that we have sufficient cash to get to cash flow breakeven. But it doesn't give us the cash we do have, doesn't give us the opportunistic sort of way we want to create or operate this business because there may be other businesses. There may be other products that we want to add to our portfolio. And with the skinny balance sheet we do have, that is not available to us.

So we want to grow this business organically with the products we have, but we also want to take -- be opportunistic and put other products in our product portfolio. And with the cash we have, we don't necessarily have the ability to do that.

Thanks, David. Coming back to you, there are a couple of topics which I'm going to approach in turn. The first topic we're going to talk about is international. We had a few questions there, and then the next one will be thinking about sort of future opportunities.

So on international, sort of I think two topics I'd like to hear your thoughts on. The first is specifically to RECELL, how you are prioritizing the ramping up of commercialization of RECELL outside of the U.S., particularly in light of some of the recent regulatory groundwork that we've been doing when you look at the CE mark in Europe, U.K. and you look at the recent certification here in Australia and New Zealand. So we'll do that first.

And then the second part of that question is specific to Japan. There have been some questions about the status of Japan. We've been in that market for a while now. What's your assessment of where we are today in Japan? And how do you sort of see that particular market going forward?

Thank you. So when I look at Japan, I look at Australia and New Zealand and then I look at Europe, there are kind of 3 different stories. Number one, before I get into that, we're laser-focused on where our bread is buttered, which is in the U.S., right? So we're not distracted by our international efforts. We're not spending a tremendous amount of dollars in those markets. What we've chosen to do is find really, really strong partners in distributors in those countries that we can work with, that we can work through. That's number one.

Number two, as it relates to Australia, I think we talked about it a bit. We're underperforming in Australia. RECELL GO approval will make a big difference, having the distributor that we have will make a big difference. We need to support them. We need to kind of breakthrough. There's kind of an east-west thing in Europe, where on the east side of the country in Australia, we haven't made the progress that we should. So there's just a lot of work to do there, but we're -- we've got a lot of good resources. I expect that to grow.

Europe is -- we're 6 months in or less. We're in the process of making sure we understand how the economics, how people are getting paid, the distributor in each country. A lot of times, we lump Europe like it's one thing. It's -- every country is different in terms of payment, in terms of obviously, a different distributor. We're finding out our gaps as well as opportunities. We're not in Europe just for the sake of it so that we can say we are. We're focused on being in countries where we can move the needle, where we can make substantial progress. If there are countries that just -- the climate is not hospitable economically or otherwise, we won't be there. At least we won't be there in the short term. We want to be where we can make a difference clinically, but also economically.

Japan has been around for a while. They have meaningful revenue there. But again, fresh set of eyes on the company means a fresh set of eyes in Japan and really understanding the market. The way that I've been running the company and the way that we will run the company is very data-driven. We'll do clinical studies because they'll matter, because they'll make a difference, they'll move the needle in adoption or in revenue. We'll do product development or as David said, in the future, we'll bring on another product because it makes sense in terms of our value proposition or where we're trying to go in the future.

It's not -- and I'm not saying this is the way it's been in the past, but I am saying that we won't do things for no good reason. And we're in these countries for a reason because we believe there's potential. We're putting the appropriate amount of resources and spending the appropriate amount of attention trying to make progress in these countries. And so I think investors should know what it is and what it isn't. We're still a high 90s percent business in the U.S. That's where most of the business is, but I think we can make meaningful progress in all of the geographies that we're in. Otherwise, we wouldn't be there.

So as I mentioned, we had a couple of questions about the pipeline and future opportunities. So I'll sort of ask again put them both out there and you can take them in turn. The first is, what is the outlook, if any, for cosmetic or aesthetic applications of AVITA's products? And then a question from the audience, what sort of -- what kind of level of resources are you presently dedicating to developing maybe completely new wound care products?

What was the first one, Ben?

Sorry, the first part is what is the outlook, if any, for cosmetic or aesthetic applications of the product?

Yes. So okay. Well, that's a good -- that's a good reference to what I just said, which is we're in spaces that make sense. The reason why we're not in vitiligo in the short term is because economically, from a reimbursement standpoint, we can't make it work. And unless something changes, it's hard to think that we'll be able to do it at any scale.

We are opportunistic at the company. So those are the -- there's focus and then there's being opportunistic. So for example, our whole company is focused on these 3 products on 2026 on executing perfectly. There are a group of us that are also picking our heads up from time to time and looking at 2027, '28, '29 and the types of products, the type of resources, type of strategy that we'll need. So we are focused, but we're also opportunistic. I mean we have plastic surgeons and we have even cash pay vitiligo patients and those that treat them that will want RECELL in very small amounts here or there. And so it's not like we don't oblige them or sell products to them. It's just not where our sales force is focused right now.

In terms of cosmetic applications, there's been a lot of talk about what RECELL could do or what RECELL could be. We're in conversations with people. We want to understand the science of it. We want to understand the ability to make an impact in any of those spaces. And so we will be -- we're not closed off, but we are focused on what we are going to do.

In terms of future product development, whether you look at something we developed ourselves or you look at something that we co-develop with somebody else, a partner or some other technology that we license or that we partner with, all that's on the table as we look at ways to offer more value to our customers.

We're already somewhat of a high-touch business. We're in those accounts. We're talking to those physicians. We're in the OR, those patients, when they come there to the hospital or when they're going through surgery, they get a number of different products and procedures along the way. Obviously, some of those are PermeaDerm, Cohealyx or RECELL or the like.

And so for us, we will look to develop and enhance what we already have. We will look to potentially develop other products. We do have people working on products, ways to use RECELL in different ways than it's currently being used. And so yes, we look at all of that. We're looking at any ways, short term, midterm, long term that we can enhance or add value to our position and our value proposition in the market.

And perhaps turning to a final topic, and it sort of brings us full circle back to the early conversation on the products. We've talked in the past about not just the products being used individually, but also collectively together for a continuum of a staged surgery, PermeaDerm, Cohealyx and RECELL. Can you maybe just sort of just talk about kind of where we're seeing that in the clinic, the 3 products being used on a single patient? And how that -- and characterize how that relates to the sort of the ASP as you sort of think about the 3 products being used together?

Well, each of the 3 products have to stand on their own. And so if you have any account that doesn't use RECELL, for example, PermeaDerm should be able to compete. Cohealyx should be able to compete on its own and obviously, RECELL as well.

So we probably have 20-some accounts that are using all 3 products. As Cohealyx and PermeaDerm come out of VAC, that number will go up as we use the relationships we have to pull through PermeaDerm and Cohealyx as our people are in cases where they intend to use RECELL and in the process prior to use RECELL, they're using a dermal matrix. Obviously, we're having those conversations about using Cohealyx versus maybe what they've been using in the past. That's all part of the process. We would expect there to be some synergies between the products and some of that to be understood more as it's used more, as they're used more in conjunction. So again, I think we feel really good about our customers starting to adopt the full portfolio or at least 2 out of 3 in different cases. We feel really good about that kind of value proposition.

Well, great. Thank you, Cary. I think we've gone through the questions. So I'll just hand back to you for any final thoughts.

Well, I'll just -- I'll say this. I think I understand what happened last year. I know I understand what happened last year. And I think a lot of it had to do with admittedly and maybe an overexuberant guidance and where everything had to happen in a certain time line in a certain way for that to come true. And I think what I've done, what I did in Q4 is understood what happened, understood what was happening, understood our baseline where we're at and the potential that we have. That's why we set the guidance we did.

It's not just Cary Vance saying, I'm reaffirming or we're giving guidance of $80 million to $85 million. This has been vetted through all the way down to the rep level. This is what they believe they could do, and we applied our own kind of understanding of what we thought the potential is. That's where we came up with the guidance that's where we came up with quotas that were a stretch, but that were fair for our salespeople so that they could be pushed, but they could also win and that we had a guidance that we set and that now we can reaffirm that you all can believe and you can believe that we're going to meet or beat it. And then it's just a matter of us showing you kind of quarter-by-quarter that we're getting there. And so Q1 was step one.

And my expectation is that, again, quarter-over-quarter, the credibility that we may have lost last year in some of this process that you'll start seeing that that is something that now you can start believing again. You can believe that we know our business, that we can predict our business and that we can grow our business and that we're doing it not just from a top level, but throughout the organization, throughout our product line, and it's something that you can feel not only comfortable with, but really excited about and the way that I am because I have a tremendous comfort level in our people and a tremendous amount of confidence in our people, our forecast, our future, and I'm generally and genuinely excited.

Reaffirming guidance is -- doesn't say enough about what I think is going to happen going forward. And I'm really excited about it, really excited to lead the business, lead the company and to communicate with all of you on a regular basis about what we're doing, what we've done and be held accountable for what I say is going to happen and help explain it to you because in some ways, it's a very simple business, a very simple trajectory vertically that the company is on.

So with that, I just -- I appreciate your time. I appreciate your support. I know a lot of you have been in the stock for a long time. We've tried your patience. My expectation is to make it all worthwhile someday. And again, I just appreciate your support.

Ladies and gentlemen, thank you for standing by, and welcome to AVITA Medical Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Ben Atkins. Please go ahead.

Thank you, operator. Welcome to AVITA Medical's First Quarter 2026 Earnings Call. Joining me on today's call are Cary Vance, President and Chief Executive Officer; and David O'Toole, Chief Financial Officer. Today's earnings release and presentation are available on our website at www.avitamedical.com under the Investor Relations section.

Before we begin, I would like to remind you that this call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results to differ materially from any expectations expressed or implied by the forward-looking statements.

Please review our most recent filings with the SEC for comprehensive descriptions of the risk factors. Any forward-looking statements provided during this call are based on management's expectations as of today.

I will now turn the call over to Cary.

Good afternoon in the U.S., and good morning in Australia. Thank you for joining us. Before we turn to the quarter, I want to briefly acknowledge my appointment as President and Chief Executive Officer. Over the past 6 months, I've had the opportunity to serve in this role on an interim basis, working closely with our team, our customers and the Board. I appreciate the confidence the Board has placed in me following a thorough search process and I'm excited to lead AVITA into this next phase.

I'd also like to recognize our new Board Chair, Jan Stern Reed. Jan has been deeply engaged with the company, and I look forward to working closely with her and the Board as we continue to execute on our priorities.

Over the same period, I've spent time visiting the hospitals using our products, and speaking with surgeons. And what's clear to me is that this is not an abstract business. When you're in the operating room, you see firsthand the partnership we have with surgeons and the role our products play in helping patients recover and return to their lives. That is what drives our mission.

Turning to the first quarter. I'll start by briefly connecting the quarter to where we've been because the progression over the past couple of quarters is relevant to understanding what you're seeing in Q1. Over the past 2 quarters, we've been focused on 2 specific priorities: first, stabilizing the business. That meant working through the disruption to clinical reimbursement for RECELL, reengaging our core accounts and reestablishing a consistent procedure-based demand cadence.

Second, improving how we operate. We simplified our focus around our highest value centers. Reenergized our sales organization and put in place a new credit agreement with terms that are better aligned to the business and our expected revenue trajectory. Q1 has been the quarter where we have begun to see those changes translate into more consistent performance. Let me begin with the headline results.

As you saw in the press release, and as reflected on this slide, revenue was approximately $19.3 million, up 4% year-over-year and approximately 10% sequentially. Building on the momentum we saw exiting Q4 and representing our highest quarterly revenue over the last year. David will walk through the full financials in more detail. But importantly, operating expenses declined year-over-year, reflecting the cost-saving actions we implemented in the second quarter of 2025, and we are reaffirming full year guidance of $80 million to $85 million.

We also saw continued progress across the business and advancement across our product portfolio. I'll speak to these during my remarks.

As we think about the quarter, there are 3 points I would highlight. First, the year-over-year comparison is still influenced by prior ordering patterns. The business a year ago included more bulk purchasing behavior that we no longer see today. Second, sequential quarter-over-quarter performance is a better indicator of underlying demand. Revenue increased approximately 10% from Q4 with product demand building momentum through the quarter and continuing into April.

Third and most important is how the operating cadence is improving. We are seeing more frequent, smaller orders, better alignment between usage and purchasing and improved engagement across our core accounts. This reflects a shift away from past variability towards consistency and ultimately, predictability going forward.

Let me now go through some dynamics across our portfolio. Turning first to RECELL. At this point, all 7 Medicare Administrative Contractors have published payment rates for clinician use. What we are seeing as a result is a gradual return to utilization patterns that reflect procedural demand rather than reimbursement uncertainty. That shows up in both reengagement within the most affected burn centers and sequential quarterly improvement in ordering and case activity.

We are also beginning to see expansion in use cases, particularly with RECELL GO mini and smaller burns and trauma settings. Internationally, recent regulatory clearances in Australia and New Zealand position us to expand RECELL GO in those markets.

In addition, during the quarter, we announced a new long-term agreement with BARDA to support U.S. burn emergency preparedness. This builds on a long-standing partnership and reflects the role RECELL can play in a mass casualty response, where rapid treatment and scalability are critical.

From a business perspective, this provides a modest level of recurring readiness revenue while also reinforcing the importance of RECELL within the broader health care system. More broadly, it underscores the clinical relevance and reliability of the platform in high-acuity settings and the confidence of a key government partner in our ability to deliver at scale.

So stepping back, RECELL remains the foundation of the business and is again a driver of utilization as we build across our accounts.

Next, let me turn to Cohealyx. From a commercial standpoint, Q1 represents early stage adoption with encouraging signals. We saw, for example, an increasing number of ordering accounts as VAC approvals advance and early repeat usage by initial adopters. This is consistent with what we would expect at this stage of a product life cycle. An important development in the quarter was the interim clinical data from the Cohealyx-I study. At a high level, the data shows a significant reduction in time to graft readiness, approximately 20 days versus benchmark with consistent outcomes across patients.

We also saw a median time to grafting of approximately 11 days. Early grafting achieved in some cases within the first week and high levels of investigator satisfaction. Importantly, this data set is now supporting ongoing VAC reviews, helping to reinforce the clinical value proposition as hospitals evaluate adoption.

We also continue to hear positive feedback from clinicians already using Cohealyx, particularly around the consistency of outcomes, which is contributing to early repeat use. We expect the full data set later this year, which will be an important next step in supporting broader adoption.

And I would encourage you to listen to the key opinion leader webinar we hosted in April, available on our website. That session walks through the data in more detail. And importantly, illustrates how Cohealyx is being integrated into surgical workflows, including its use alongside RECELL in staged procedures.

Finally, touching on PermeaDerm. From a commercial standpoint, performance is still developing. This quarter, we introduced new clinical positioning relative to cadaveric allograft, focused on its role as a more affordable biosynthetic alternative in wound coverage and healing. We expect data from the PermeaDerm-I study later this year, early signals, including histology indicate comparable biological performance to cadaveric allograft.

So similar to Cohealyx, the near-term role of PermeaDerm is to build clinical confidence, clear positioning within the treatment pathway and familiarity among surgeons. We had a strong presence at the American Burn Association Annual Meeting in April, which remains the most important clinical and commercial forum for our business.

What stood out this year was the level of engagement across the portfolio. We saw broad scientific participation, meaningful clinical interaction across multiple forums and increasing discussion around how our products are used together in practice. Importantly, this was not just awareness, it was active clinical dialogue including education, case sharing and feedback from surgeons.

So the takeaway from this year's ABA Conference, we are seeing growing clinical engagement and increasing integration into clinical discussions and workflows, supported by both data and real world experience.

In summary, over the past 2 quarters, we've stabilized the business and improved how we operate. What we're now seeing is a return to more consistent utilization across our accounts with early signs of growth as that foundation takes hold. At the same time, the momentum we saw at ABA, together with the Cohealyx clinical data reinforces the clinical differentiation and value of our platform.

As we look ahead to Q2, our focus is on continued sequential growth, driven by increasing utilization across our core burn and Tier 1 trauma accounts and demonstrating our progress is repeatable.

With that, let me hand to David to review the financials in more detail.

Thank you, Cary, and good day to everyone. As Cary outlined, the first quarter reflects continued progress as we move from stabilization into a more execution-focused phase of the business. My prepared comments today will focus on how that progress is showing up in our financial results across revenue, gross margin, operating expenses and cash.

Turning first to revenue. Total revenue for the first quarter was approximately $19.3 million, representing 4% growth year-over-year and approximately 10% sequential growth from the fourth quarter of 2025. Growth in the quarter was driven by contributions from Cohealyx, RECELL GO mini and improving RECELL utilization as reimbursement dynamics continue to normalize.

Importantly, we are seeing ordering patterns increasingly aligned with underlying procedural demand. This is contributing to improved consistency in revenue with sales performance strengthening through the quarter and showing momentum as we exited March. With our Q1 results, we are reaffirming our full year 2026 net revenue guidance of $80 million to $85 million.

Turning to gross margin. Gross profit margin for the quarter was 81.7% compared to 84.7% in the prior year period. The change was primarily driven by certain required inventory reserves and product mix with Cohealyx and PermeaDerm contributing a greater proportion of revenue.

As we've discussed previously, while this shift in product mix impacts reported gross margin percentage, these products contribute incremental gross profit without a proportional increase in operating expenses.

As a result, they remain accretive to absolute gross dollars and supportive of operating leverage over time. Consistent with the framework we outlined with our broader portfolio coming out of 2025. RECELL gross margin remained strong at approximately 85% and we expect that to continue.

Turning to operating expenses. Total operating expenses were $24.5 million, down 11% year-over-year. This reflects continued execution against the cost optimization initiative, including transformation of the sales force implemented in 2025 and reinforces that we are operating with a lower and more disciplined cost base. Importantly, this structure is now stable and aligned with the current scale of the business. As revenue grows, we expect this to support improved operating leverage.

Net loss for the quarter was $10.6 million or $0.35 per basic and fully diluted share and an improvement compared to $13.9 million or $0.53 per basic and fully diluted share in the prior year period.

Now turning to cash, which we recognize as a key focus. Net cash used for the quarter was approximately $9.9 million. As expected, cash use was higher in the first quarter driven by seasonal compensation and other onetime payments and was further elevated by the timing of revenue and collections. Cash receipts obviously lagged revenue and with a greater proportion of product sales occurring later in the first quarter, our cash receipts were negatively impacted, which increased our cash use.

As we move into the second quarter, these timing dynamics have reversed. Seasonal and onetime items are completed and collections from strong late first quarter revenue and early second quarter sales activity are driving higher cash receipts, combined with ongoing cost discipline, this gives us strong confidence in a significant decrease in cash used in the second quarter. We ended the quarter with approximately $14.3 million in cash and marketable securities.

Regarding our debt facility, we remain in compliance with the trailing 12-month revenue and minimum cash covenants under our credit facility which are aligned with our current operating trajectory. Importantly, this facility put in place in January with Perceptive Advisors was structured to provide greater flexibility than our prior credit agreement, with covenant thresholds set meaningfully below our expected annual revenue levels and a reduced minimum cash requirement.

Given the level of headroom, we would not expect the revenue covenants under this agreement to be an area of focus going forward. For context, the second quarter trailing 12-month revenue covenant of $69 million implies a second quarter revenue requirement of only $15 million, which remains well below our recent quarterly revenue levels. The structure is interest-only and includes additional capacity subject to achieving a defined revenue milestone.

Taken together, these terms were designed to support execution rather than constrain it, providing improved visibility and headroom as we scale the business. As a result we believe our current capital structure is well aligned with our operating plan that supports our ability to manage the business for continued growth, improved cost efficiency and ultimately, financial sustainability.

In summary, we are seeing sequential quarterly revenue growth with an improving demand consistency, a stable and disciplined operating cost structure and clear visibility to lower cash use as we move into the second quarter. These elements reflect continued execution against the framework we established in 2025 and reinforce our focus on delivering consistent and repeatable performance through the year.

With that, I'll hand it back to Cary.

Thank you, David. So just to summarize the first quarter, we delivered a solid revenue performance in Q1, supported by improving RECELL utilization. We exited the quarter with increasingly consistent procedure-driven demand across our core accounts. We generated compelling Cohealyx clinical data reinforcing its differentiation over other dermal matrices. And we strengthened our leadership as we shift gears into this next phase of our AVITA journey.

As we look ahead to Q2, the focus is clear: build sequential growth and demonstrate recurring progress across our business.

With that, let's go to questions.

[Operator Instructions] And our first question comes from Frank Takkinen with Lake Street Capital Markets.

Congrats on a solid Q1. I was hoping to start with a question more on composition. I don't know if you'll go as far as sharing the breakdown between RECELL and Cohealyx, if you would, that would be great. If not, maybe a backup question would be just speaking to maybe which 1 was a stronger driver of growth? Was it a rebound in RECELL or kind of Cohealyx coming up the curve pretty quickly.

I mean, we're not going to break it out yet. But I mean, it was a combination of the 2, Frank. We grew in RECELL and we grew in Cohealyx. Those are the 2 main drivers.

Okay. That's helpful. In the prepared remarks, I think you made a comment of Q2 sequential growth continues to be expected. Can you maybe talk to that a little bit more? And then, obviously, the quarter was a little ahead of where Street expectations were and understand the appetite to put out expectations you can achieve. But maybe talk through how you guys thought about maybe taking the guide up a little bit, just given how well it seems the recovery is going in Q1.

Yes. I mean right now, we're sticking with the guidance. But I do think that this is a business that builds on itself. I think a lot of the work that we did even in the latter part of 2025 brought us the results in Q1. And I expect that work to continue. There was a lot of good work aside from bringing in orders and revenue. There were a lot of things built. There were hospitals that came out of VAC around Cohealyx. So there's a lot of progress behind the scenes, behind the revenue number.

And we expect to be able to retain that kind of progress that we had in Q1 into Q2 and capture 3 months of it as opposed to maybe a month or 2 of it when we got a new physician or new procedures on board in Q1. And so we expect that to build on itself kind of quarter-over-quarter. That's why we speak to it in that way. And so more to come in a few months.

And the next question will come from Ryan Zimmerman with BTIG.

Cary, David, congrats on the progress. Just to put this behind us, Cary, on the MAC dynamics. I appreciate you sharing that the 7 MACs are now publishing rates. I just want to confirm though, beyond the published rates, the seventh MAC that you were waiting on, everyone is now fully reimbursing for RECELL at this point, correct?

That's correct. Thank you, Ryan. So they've all published and there was 1 MAC that the rates were -- the rate was below the others that they've brought that rate up in line with everyone else.

Okay. That's very helpful and really good to hear. As far as -- and this is just a part of this question, and I follow up on BARDA. But just you made some comments about utilization and really smaller burns seeing some adoption. And so I'm wondering if you could elaborate on what's driving that? Are you explicitly targeting lower TBSA burns because they're more frequent? And it would suggest that doctors are becoming more comfortable certainly with the RECELL device, if that's the case. I'm wondering if you could kind of speak to that. And like I said, I just have one quick one on BARDA.

So I mean, obviously, we're pushing for them to use it on every wound and every size burn. The question is always with clinicians, is it worth it? So is it worth it economically? Is it worth it in terms of the time and the workflow. So I think it's a combination of things.

I think clinically, we're showing and convincing more that the impact on healing, on pigmentation is worth it for the patient. I think having an offering of RECELL GO mini for -- that's less expensive, that's really made for smaller wounds and then the economic impact of length of stay or the advantage to the patient and to the hospital and to really everyone involved for healing faster, I think it's just starting to resonate, and we're trying to basically cover all our bases in terms of objections or reasons why they may not use it. We're trying to address all of those through technology, through data, both economic and clinical.

Okay. Last one, maybe more for David, but the BARDA contract, I think it's up to $25.5 million in revenue -- potential revenue. I think $3.5 million, if I'm not mistaken, is guaranteed. So David, how are you thinking about that coming through when it comes through? Any guidance would certainly be helpful there? Appreciate it.

Sure, Ryan. Good to hear from you. And thanks for the question. What's guaranteed is around $3.9 million over 10 years. And that is basically amortized per month over those 10 years. So you can pretty much assume that it's going to be about $100,000 per quarter, $30,000 or so thousand per month. And it is billed on a monthly basis.

So that cash comes in during that 10-year period. The rest of it is only if there's a mass casualty. And what we're required to do is to have safety stock. We're required to have stock on hand, but it basically equates to our safety stock anyway. So it's not an increase, and I've been asked this question before, and I'll just tell you, it's not an increase in cost to have that safety stock that fulfills our requirements for BARDA.

The next question is going to come from Chris Kallos with MST Financial.

Just a quick question. Regarding the guidance, in terms of the multiple moving parts now with the product mix, what would be the drivers that you'd be looking forward to maybe for us to expect the company coming at the high end of guidance for the year. What -- in light of the Cohealyx data and the rest, what should we be aware of?

I mean I think we have -- thank you, Chris. Good to hear from you. I think we've got 1 quarter under us, right? And so I think while I and the team have a good sense of confidence, me 6 months into the role, where we stand, what we know, how, what we're doing is impacting the market and the number, it's still just a quarter. And I think for us, it's a matter of seeing the progress throughout the course of the year. That will give us a better level of kind of confidence and sight into where we would expect to finish the year. And my expectation is we're going to be as transparent as we can be about how we're progressing and what we expect and that we'll report out accordingly.

Great. And just a follow-up question regarding the smaller purchases that are coming through at the moment, can you maybe relate that to -- has that been a result of a change in strategy in the sales team and/or headcount? Maybe a comment on that.

Sure. I think we want customers to order in a way that is convenient for them in terms of how much they stock, in terms of how often they use it. We're responding to them. I think we want to make sure we're not pushing any of our own agenda about wanting any larger orders or that doesn't really help us even things out.

What I like from the AVITA side of this is it becomes very consistent and very predictable. And I think as we go through weekly regular forecasting exercises, we're becoming very good at understanding how our customers buy and predicting how they will buy in the coming weeks and months of the quarter.

And again, we would not do it that way if our customers didn't want it that way. So it's really a combination of giving them -- letting them order the way they want to order and use it and us having a mechanism and a process that helps us be very predictable.

And just 1 last question for David. David, in terms of cost-outs have we reduced the costs as much as possible. Should we sort of expect the cost line to stay stable from here on?

Yes. I think you have to look at it that we've stabilized the cost structure. And I've talked about this previously. The one variable that I hope goes up is commissions because that's the one that will drive -- will be an indicator that we're having more revenue. But from a G&A and R&D and headcount perspective, our cost structure is where we want it to be.

[Operator Instructions] The next question comes from Josh Jennings of TD Cowen.

Congratulations again, Cary, on getting the interim tag removed from your CEO title. I was hoping to just start off -- I mean, I know you had a couple of questions on MAC and you described the progress of 7 MAC publishing. Can you help us just think about this physician confidence and/or centric burn center confidence in terms of getting reimbursed for RECELL where we are there? I mean you think we're 50% to 75% VAC. I know you're banking on continued progress sequential growth over the course of this year. But maybe just help us think through where you are in that recovery on the physician and center confidence front that they'll get reimbursed.

Yes. I'd say 75% probably a good number. And as we've talked over the last 3, 5 months, I've kind of said that's the way it's going to be. There's the official MAC situation and then there's an education and communication that needs to take place to make sure that we're back to where we were over a year ago. I think that some of it is that. And then some of it is right now, we're in a kind of blocking and tackling mode health care system -- by health care system or hospital by hospital where they have their own internal communication about what's getting reimbursed and how to get reimbursed.

And so we're just trying to help with the education of all of that, something we probably would have been doing more of a year ago had this MAC issue not come up, right? So now after the fact that, that is kind of officially cleared up, now we kind of go hospital by hospital with our health care access team along with our commercial teams and make sure they understand how they get paid and how to work through the process.

And just coming out of ABA with the Cohealyx update, I was hoping -- and clearly, there's more buzz around that product. But I was hoping you could just maybe put a finer point on what you're seeing in terms of traction, still early days post ABA, but any surgeon feedback? And then also, if you could give us any just updates on the number of centers that are starting to use the entire portfolio, RECELL, Cohealyx and PermeaDerm and seeing some of the initial traction of the portfolio build-out.

Sure. I'll answer the second one first. So I think we're in the 20s in terms of centers that are using all 3 products. I think, again, if you haven't had a chance on our website, there was a great webinar we did during ABA where it was me and Katie -- Dr. Katie Bush as well as 2 of our physicians, and they spoke way better than we could about the day-to-day use, utilization and workflow of Cohealyx and PermeaDerm as well as the study and some of those results because that's -- both those things matter. Obviously, data matters, but so does the day in, day out and just the credibility that they have. And I encourage you all to go back and listen to that if you haven't already.

But I think that there's a substantial amount of buzz that comes out of ABA and the study itself and the preliminary release. I think it helps us in our VAC committees with a little bit of acceleration. That's just a gut feel that feeding them better and more information as they're in the process is going to help get it out of there sooner.

We just want to compete. I think that Cohealyx competes very well with other dermal matrices. I think we have some advantages as well. And we just want to get out there and do that. But in order to do that, we -- this data will help quite a bit as well us just practically getting out of VAC and having more people use it and give us their input and be reference sites for others to understand the advantage of using Cohealyx.

And so I think it's palpable, and it's exciting. And I'm looking forward to the months ahead as I would expect to see 12 to 15 VACs -- Cohealyx come out of 12 to 15 VACs every quarter. That's about what it was last quarter. That's another expectation, I have this quarter, and I expect that to continue. We still have about 55 to 60 of them in VAC. Every time we get some of them out, some more go back in, which is great because at some point, we're going to be covered across all the burn centers and the Level 1 trauma centers, and we're going to be cleared to compete in every one of them.

Thank you. And I'm showing no further questions in the queue at this time. I will now turn the call back over to Cary for closing remarks.

Thank you, operator, and thank you to everyone for your time and support today. We look forward to continued engagement and discussions with all of you in the coming days and weeks, and we look forward to another great quarter. Thanks, everyone.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Thank you for standing by, and welcome to the AVITA Medical Cohealyx KOL Investor Webinar. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Ben Atkins. Please go ahead, sir.

Thank you, and welcome to the AVITA Medical Cohealyx Key Opinion Leader webinar. Today, we will be reviewing an interim analysis from our Cohealyx I study, which evaluated time to autografting against a literature-derived performance benchmark.

Before we begin, I'd like to remind you that today's call will include forward-looking statements regarding AVITA's current expectations about future events. Please refer to Slide 3 for additional details. It's now my pleasure to introduce our speakers. Joining us today are Dr. Derek Bell, Professor of Plastic Surgery and Kessler Burn Center Director at the University of Rochester Medical Center; Dr. Lourdes Castañon, Clinical Associate Professor of Surgery and Director of the Burn Program at Banner University Medical Center, Tucson, affiliated with the University of Arizona College of Medicine; Cary Vance, Interim CEO of AVITA Medical; and Katie Bush, Senior Vice President of Scientific and Medical Affairs. We'll begin today's discussion with opening remarks from Cary Vance. Cary, over to you.

Thank you, Ben. Acute wound care today is complex and resource-intensive. Patients often require multiple procedures over extended periods and variability in the path to closure can drive longer hospital stays, higher complication risk and increased cost. At AVITA, we are a hospital-based acute wound care company. We are focused on a concentrated set of burn and trauma centers where we have deep relationships and a consistent clinical presence.

Growth in this business is driven less by adding new accounts and more by increasing utilization within the accounts we already serve, the same clinicians using our products across multiple patients over time. That's the foundation of our strategy.

Built on that is our portfolio of 3 complementary technologies: RECELL, our spray-on skin technology, which enables skin regeneration at the point of care; Cohealyx, a dermal matrix that prepares the wound bed and PermeaDerm, which protects and stabilizes the wound.

Individually, each of these products has clinical value. But the real strength is how they are used together on the same patient by the same clinician, optimizing the full healing pathway from wound bed preparation to dermal repair to skin coverage. And the goal is straightforward: accelerate progression to closure and healing, what we call it AVITA healing at the speed of life.

That matters clinically, but it also matters economically, improving hospital workflow, reducing length of stay and lowering cost of care. As we look at that pathway, one of the key bottlenecks remains wound bed preparation. Delays at that stage extend care and increase risk. That's where Cohealyx is designed to play a role, enabling faster, more reliable progression to grafting. Where we continue to see a bottleneck today is in preparing the wound bed for closure. Delays at that stage drive prolonged care, higher risk and increased resource utilization. That's exactly where Cohealyx is designed to play a role, enabling faster, more reliable progression to grafting.

Today, we'll share early data from our Cohealyx I multicenter study, including an interim look at time to grafting. And as we improve that step, we also expand the opportunity to utilize our broader portfolio, increasing value per patient and strengthening our leadership in acute wound care.

With that, I'll turn it over to Katie.

Thanks, Cary. Before we get into the data, I do want to take a moment to ground everyone in a key concept that underpins the Cohealyx I trial. In the treatment of deep injuries, a skin graft is used on the injury site, which originates from a donor site on the patient. This skin graft has limited vascular supply. And in order for it to successfully take, the wound bed has to be properly prepared.

It needs to be vascularized, it needs to be stable and ready to support that graft. If that doesn't happen, the graft will not take and the wound will not heal. And in practice, the preparation of the recipient site or optimization of that site is often what drives a delay in treatment. So while skin grafting is a standard and effective approach for wound healing, the rate-limiting step is getting the wound bed to a point where grafting is actually possible.

What we've seen consistently across our RECELL clinical trials, published data and real-world use is that clinicians are trying to solve the problem of wound bed optimization with dermal matrices.

In fact, more than 1/3 of patients in our RECELL trials and over 40% in published data sets receive a dermal matrix as part of their treatment. So the need is clear, but limitation of current solutions is time. In a meta-analysis review of literature, time to grafting with dermal matrices averaged approximately 33 days.

And that delay has real consequences, including increased risk of complications, longer hospital stays and overall higher cost of care. That's the problem Cohealyx was designed to address by enabling faster progression to grafting.

Our approach with Cohealyx has been to build evidence in a stepwise data-driven way. We started with preclinical work followed by clinical case series and real-world experience. And now with the Cohealyx I multicenter clinical trial, we are generating higher quality clinical evidence.

Across each of these stages, we've seen a consistent signal, a meaningful reduction in time to grafting. And in the interim analysis of Cohealyx I, we are seeing a significant decrease in time to grafting compared to the objective performance goal based on currently used dermal matrices.

At this point, I think it's most valuable to hear directly from the surgeons who are using Cohealyx in practice and who participated in the trial. Dr. Derek Bell, a Burn and Plastic in Reconstructive surgeon from the University of Rochester Medical Center in Rochester, New York; and Dr. Lourdes Castañon, a burn and trauma surgeon from the University of Arizona Department of Surgery and College of Medicine. They'll walk through their clinical study experience and how this translates at the bedside.

So with that, I'll turn it over to Dr. Bell and Dr. Castañon.

Thank you, Katie. As Katie mentioned, there is a clear need in clinical practice for better solutions to prepare the wound bed and get patients to closure more efficiently. That's what led to this multicenter study evaluating Cohealyx with full thickness wounds. I've previously worked with AVITA on prior RECELL studies, and I was particularly interested in utilizing this Cohealyx study because this is a real barrier in getting our patients to closure in a timely manner.

The goal of this study was to evaluate the ability of Cohealyx to advance wounds to the preparation and readiness stage for closure. The study enrolled patients across 20 centers, including many high-volume verified burn centers, which gives us a data set that reflects our real practices within our country.

The Cohealyx I trial evaluates Cohealyx with a standard 2-stage treatment approach consistent with how we manage many of our full thickness burns. I often utilize a 2-stage approach with my patients with a variety of different acellular dermal matrices in doing so.

In this study, the primary endpoint was the time to skin grafting, essentially how quickly can we get this patient from its initial treatment stage to the time of closure. Cohealyx is first applied to the wound bed.

And once the wound is ready, then the patients proceed to definitive closure with split thickness skin grafting often in combination with RECELL. This is a critical milestone. The faster we can get the closure, the better this is for the patient.

We evaluated this against literature reported mean of 33 days with 28 days being the lower bound of the confidence interval, representing the objective performance goals. This benchmark was established based on published data currently utilized with different dermal matrices, including but not limited to PolyNovo BTM, Integra and MatriDerm.

These are many of the products that we use in our practices. These studies were selected because they have sufficient published data to establish a reliable evidence-based benchmark, which serves as a meaningful reference point for how patients are typically managed.

This study includes a broad patient population without restrictions to patient condition or wound size, which makes the findings highly predictable to our everyday practices. In addition to time to grafting, the study also evaluated time to healing, scar outcomes and, of course, the safety profile, which is important in any studies.

So again, our target patient population was acute full-thickness wounds that required stage procedures without limitation to size with endpoints being wound healing, scar assessment and safety. This slide summarizes the primary endpoint, which is the time to skin grafting. We see from this that there's a clear reduction compared with the meta analytic control.

The mean time, decreases from 33 days with controlled matrices to 13.6 days with Cohealyx . So this difference is almost 20 days, 3 weeks essentially. This magnitude is significantly meaningful. The reduction in time by nearly 3 weeks significantly changes the course of patient care, including the risk of complications and overall utilization of our resources.

So the faster we can get our patients healed, the better it is for the patients because it mitigates risk of infection, mitigates utilization of resources within our community with prolonged wound healing, nursing, time in the hospital, et cetera.

Looking beyond the mean, the median time was 11 days, which reflects where most patients are falling. This suggests that there's an effect that's not driven by a small number of early cases, but it's pretty consistent across our cohort. The early sign of grafting that we saw was 5 days. The p-value was less than 0.001, which indicates that this is clinically significant, statistically significant data.

This is a great slide. Building on our earlier time to grafting results, it shows how this translates across our entire cohort. Most of the patients were grafted within a relatively tight window, about 72% or 3/4 were grafted within 14 days, 25% of those patients were grafted within the first week. This isn't just an average effect. It reflects how the majority of patients are progressing throughout the study.

There's a clear clustering in the 7- to 14-day range, which aligns with the median of 11 days. This consistency is important as it suggests a predictable pathway rather than just a few early responders within the study. There are some outliers, which is expected and this reflects what we see in our clinical practices.

This may be reflective of some patient-specific factors, patients that may be more sick or have more complex wounds. So this is not surprising. But overall, this reinforces that there's a consistent and accelerated time line to grafting for this subset of patients.

Beyond just the clinical outcomes, this reflects that the investigator experience is pretty good across the cohort. The satisfaction of the investigators was 90%, either being satisfied or very satisfied. None of the responders were very dissatisfied and only 10% were either dissatisfied or neutral. This suggests that the experience with the product is reproducible across the patients, and it isn't just limited to a subset.

Satisfaction is not just subjective, it reflects how the technology performs in routine practice, how this integrates with our workflow and whether this is consistent in its results. When investigators are consistently satisfied, they're more likely to continue to use this product and incorporate this into our practices. This is something you need to think about when utilization across many centers throughout this country.

This is my first patient I utilized in this trial. It's a 62-year-old gentleman who had flame burns to his trunk. The total service area was almost 500 square centimeters. He also had a history of COPD. So here is at presentation upon entrance into the operating room. He had 30 degree burns throughout the majority of this area. The area that you're looking at is his right torso with his head and shoulder being to the right and his hip being -- or his head and shoulder to the right and hip being to the left.

Here is after excision, you can see that there's a healthy appearing wound bed that's going to be accepting of the graft. There's the application of the Cohealyx. I fixed along the perimeter sparingly using skin staples and then moisten the product with saline, so it conforms to the wound bed uniformly.

You see a small red dot in the middle, it's a biopsy site for the study. Here's this patient 11 days, and he's determined to be appropriate of autologous grafting. You can see that there's nice granulation tissue throughout the majority of the wound bed. So I know that this is going to be ideal for accepting a graft.

So I put split-thickness sheet grafts on him. The reason why I roll up is because the resins tend to put the grafts upside down. These are split-thickness sheet grafts, extremely thin, 0.004 inch. There they are applied to the wound bed.

I fix them further with a wound VAC. So here's a patient 7 days postop. After the VAC takedown, you can see excellent adherence to the grafts throughout. Here is a 14 days postop and you can barely discern that this patient was even grafted.

And 8 weeks postop, you can see the majority of this is the same color and consistency as the own-burn skin. He has some areas that are a little bit hyperpigmented. However, this is smooth, soft and supple. He has a fantastic result.

So what are the key takeaways? First Cohealyx serves as a dermal matrix. We're optimizing the wound bed prior to grafting, which is translating to shorter time to definitive coverage compared to our historically published controlled acellular dermal matrices.

Secondly, our primary endpoint is designed to capture efficiency and how quickly these patients progress to closure. This is clinically meaningful. In this study, the investigators were satisfied or very satisfied with the quality of the wound and the time to grafting with the Cohealyx.

And now I'll be passing this over to my good friend and colleague, Dr. Castañon, who will discuss her experiences with Cohealyx. I thank you for this opportunity.

Thank you, Dr. Bell. At our center in Arizona, we treated 4 patients, and I will be presenting on our initial experience. This was a 55-year-old male with an upper leg wound with a necrotizing soft tissue infection or NSTI. The patient underwent surgical excision to healthy margins followed by Cohealyx placement.

It is important to note that this patient was critically ill. Their comorbidities included heart failure, cirrhosis, obesity, all which are known factors to delay wound healing. Clinical progress was monitored, and you can see the incorporation of Cohealyx 6 days following application in the leftmost image.

On postoperative day 13, the wound that appear red vascularized and suitable for skin grafting. In addition to the clinical observations, we conducted histological analysis to better understand what's happening in the wound bed prior to grafting. At day 13, a small sample was biopsied from the center of the wound bed.

What we see is the formation of dermal-like tissue layer, consistent with the proposed mechanism of action of Cohealyx supportive of effective graft preparation. Importantly, these findings align with the preclinical data, giving confidence that the product is translating as expected into the clinical setting.

Here, we can see the outcomes for this patient on the left at 12 weeks post skin grafting, having favorable skin graft take, cosmetic outcome and durability. Overall, my takeaways from my experience with Cohealyx to date include: one, it supports progression to skin grafting within clinically meaningful time frames; and two, across both the trial and my clinical practice, I am seeing consistent performance in a range of complex patients with time to grafting beginning to trend below the median observed in the study as I am getting more comfortable with what this product can do.

Thank you to Dr. Bell and Dr. Castañon for sharing both the interim data and their clinical experience with Cohealyx. This slide outlines how we're building and communicating the data set over time. We began with early readouts in 2026, sharing single center results and histology to establish initial clinical signal. With the interim analysis, we're now incorporating these data in the abstracts for upcoming conferences throughout the year.

In October of this year, the full data set will become available. And from there, we will expand to multicenter presentation at major conferences in 2027, covering safety, efficacy and broader scientific validation. In parallel, we're targeting publication providing peer-reviewed validation of the data.

Overall, this strategy allows us to communicate the data from initial readouts through full validation. With that, I'll hand it back to Cary to provide some closing remarks.

Thanks, Katie, and thank you to Dr. Bell and Dr. Castañon for your insights and for sharing your clinical experience. Let me close with a few key takeaways. First, Cohealyx is addressing a critical step in the pathway. We are redefining wound bed preparation with faster, more predictable progression to grafting.

Second, the interim data support both the clinical performance and the commercial potential of Cohealyx. This is not just about outcomes, it's about how those outcomes translate into real-world use.

Third, we're seeing strong surgeon satisfaction. And that matters because adoption in this market is driven by clinical confidence and repeat use within existing accounts. And finally, this drives greater value per patient. It reinforces our procedure-based platform with clear milestones ahead as we continue to build the data set and expand visibility.

Stepping back, what this reflects is progress. Progress in how we support clinicians, progress in how we improve patient care and progress in how we build a more valuable, more integrated acute wound care platform. With that, let's open the line for questions.

And our first question for today comes from the line of Ryan Zimmerman from BTIG.

For the physicians on the call, I appreciate you guys sharing your experience with us. Maybe the first question, I'll ask both upfront. But the first question is just why have traditional dermal matrices taken longer in your view? And what is it -- what's unique in your view about Cohealyx that enhances that time to skin graft?

And then the second question, I'll ask upfront is, historically, AVITA has been a one-product company, right, with the RECELL device, which has been very effective in burn care. Now with Cohealyx and PermeaDerm, there is more potential to use those in conjunction with the RECELL device.

But I'm just curious if you foresee using Cohealyx for all the cases where you would use the RECELL device and just how to think about the utilization of these additional products in conjunction with the RECELL device.

This is Derek Bell from Rochester. I think to answer your first question, I think that in my hands, the reason other products have taken longer to integrate is in part their composition. A lot of these products, in my hands is consistent with the 33 days. And I think that the time to vascularization just takes a long period of time.

With other products, I have tried to push the envelope and graft them sooner than 3 weeks and the grafts fail. I don't think that they incorporate imbibe and establish angiogenesis and vascular ingrowth as readily as Cohealyx does.

So I have changed my practice. I've had experience with a couple of different ones. And what has changed for me is the early incorporation onto the tissue. And I've been using it in combination with RECELL and 4:1 grafting. I will say with the combination of both products, I no longer do a 2:1, 3:1 graft.

I've been, for the most part, doing a 4:1 with RECELL on top of the product, and we've had really great results. For us, length of stay is a big issue. We are 1 of 2 centers in Arizona, and we have high volume. So for us, we want to get them out of the hospital as soon as possible. So this combination goes along with our practice, getting them out of the hospital as soon as we can.

And just a follow-up, do you anticipate for all of the burn cases you're using RECELL today? Or is there a size limit or a TBSA threshold you think about using Cohealyx and PermeaDerm or Cohealyx either one relative to maybe the size parameters you use the RECELL device for?

So I'll be honest with you, I've been experimenting since I started playing with the product, and I have pretty much applied it in different locations. We've had a couple of areas like -- so for example, traditionally, the hands of the feet tend to have like much thicker skin. And I would opt for a dermal matrix that's a little bit heavier. We have had some cases where we had an evulsion of a finger and it worked really nicely.

There are other sensitive areas such as like the dorsal of the hand or like the face. We've had a couple of face cases just recently.

And it accommodates -- like I said, I've been kind of pushing and this is only in my experience with the cases that I've been working. I've actually stacked the product and was able to gain a little bit more of a height using it.

So it's very versatile in the sense that it because it absorbs quickly, I'm able to visualize what it's going to look like, and I'm able to stack, so I'm able to better contour it to the wound.

So yes, at least in our practice, we've been using that a lot more than any of the other products since we started.

[Operator Instructions] Our next question comes from the line of Frank Takkinen from Lake Street Capital Markets.

I was hoping to start with one, maybe a little outside of the -- or I guess, related to the clinical side, but a little bit outside of it. One key barrier to adoption is consistently VAC committee approvals.

I was curious if each of you could speak about that process at your respective sites. And then at the risk of having you kind of theorize for other VACs and understanding they're all unique, do you feel the current clinical data as well as today's data is enough to start having more standard of care level VAC approvals across the greater industry?

Thanks for the question, Frank. For me, I think that we have a pretty stringent VAC committee. But I think for me, being part of the trial and be able to cooperate this data in conjunction with people at other burn centers that I know well. I know that this data is legitimate.

I think for me, that helps to get the product through the VAC committee as well. I think the price point on it is it's always a sticking point with our VAC committees. I think the price point is good and that it's far better than that of other products that are lesser quality products for the reasons I stated.

And I can add to that, that we recently had to go through the Lumière process. And for us, we are part of Banner, so we're in multiple states. So if we approve a product, it's approved on multiple hospitals within the system. It helped us that we were part of the study because we were able to review our data with the committee.

And they keep track of all this information. So they were very impressed. We had no issues attaining that. And yes, the data that's out there, the experience that we're having with it is very positive and has been very well received.

That's helpful. And then maybe just one last one. Is there a reason to still use other dermal matrices in light of today's data and then obviously, the price point, Dr. Bell that you recently referenced.

And then maybe one last one, I'll sneak in there, too. Any other data that is on your wish list for Cohealyx as you think about adoption?

I think that in using other products, I think that the needle is going to swing for me. I think that I'll probably -- those other products will probably go by the wayside. I think its utilization is multivariable, not just burn injuries, but also open wounds.

I think the product is very good because it conforms nicely as well. So in some of these wounds, it can be really challenging because of the concavities, I think that it's a benefit as well.

So I don't see limitations in its usage, and I think other products will go by the wayside.

For us, it goes along with our workflow. Like I said, we have a very large focus on length of stay and our cost center. And it works really nicely in terms of integration and early discharge. It is a product that you could actually see incorporating almost immediately. So even identifying if it's working or not, not working is very easy to identify early on by our staff, and we're training our staff to identify this.

And we have a relationship with our LTAC. So that helps with our length of stay as well. So they are aware of what the product should look like. So the fact that it incorporates quickly, you know if it's working or not.

So it strongly does help significantly as opposed to other products where you have to wait anywhere from 3 to 4 weeks before you even consider putting a skin graft on it just because it takes time for it to fully granulate and be a good wound source for a skin graft.

[Operator Instructions] And this does conclude the question-and-answer session of today's program. I'd like to hand the program back to Cary for any further remarks.

Thank you, operator. We appreciate everyone's time and attendance and engagement today. We're really excited about what we're doing at the company. We're really appreciative of Dr. Bell and Dr. Castañon ère, and we look forward to speaking to you all next month when we announce our Q1 earnings and having further discussion. So thank you. Have a good evening.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

[Audio Gap]

to understand how much they use, how much they buy, when they buy so that we can be predictable and we can impact that number and grow that number. we talked about last quarter, our shift in our sales force, reducing the spend on the sales force, reducing the size of our sales force, but then also moving them geographically as appropriate to focus on those 2 in key accounts, the 120-plus burn centers as well as the 50-60 Level 1 trauma center. So we took advantage of the opportunity to not only cut costs, but also refine our strategy, focus our call points and keep the best of the best in terms of that sales team, give them appropriate quotas, stretch quotas for them to go after 2026.

We also obviously have a 3-product platform. All 3 of those products still are fairly new. RECELL is not new, but RECELL GO is as well as Cohealyx and PermeaDerm, and that creates its own challenge in trying to get it into the accounts to sell, and we'll talk more about that. And we talked about the reimbursement challenges. The last time that we were here. We were still working through that process. We still are to some degree, but it's largely handled and I'll talk more about that.

And then, of course, we had continued to trip these covenants with OrbiMed. And we we thought it was really important to solve that issue to remove that, and we've done and as well. We grew about 11% in 2025, which isn't which isn't super impressive, but it's also not flat to negative considering all the headwinds that we had. This year, we expect to grow between 12% and 19%. We expect to get back on track to the kind of growth we've had in years past.

Specifically around reimbursement, we I think the last time we had 3 of the 7 MACs Medicare administrative contractors had been had published their rates. And now we're at 6 out of 7 in that seventh MAC, I'm highly engaged with them and the representatives that represent their constituents in the states that, that covers. And we expect them to publish as well as they've committed to do so. I'll now hand it over to David to go through some of the numbers. Go ahead, David.

Let me give you some color on our financial results for the fourth quarter and for the full year. Cary has already talked about the $71.6 million for the year, that's 11% growth. It's not where we want to be, but again, it is growth. We've talked about the $80 million to $85 million guidance already. Where I want to spend a couple of moments on is the gross profit margin. it was 82.1% for the year, 81% for the fourth quarter. That was impacted by a few things. One was we had some inventory reserves that we had to book that will not reoccur. And then also, we do have a product mix impact that will continue both Cohealyx and PermeaDerm, we have revenue sharing arrangements with our partners. Cohealyx, we have a 50-50 [indiscernible] and statical we have a 60-40 split.

And therefore, as the revenue from those products grow, there will be an impact to gross margin. However, for this year specifically, we expect resale to grow even faster than Cohealyx and PermeaDerm. So -- and our expectation for gross margin is going to be in the range of 83% to 85%. Because we're still sticking at around 86% for our resell products. The other item I wanted to point out is operating expenses.

We've been very disciplined around operating costs we took out in the second quarter of last year, about $2.5 million per quarter when we did a transformation of our sales force. We also took an opportunity to look at G&A and R&D at the same time. So there was $10 million annually that was taken out. Our run rate for the fourth quarter was $24.7 million, but that included a number of onetime cost, specifically severance costs of about $1.2 million.

So our normalized operating expense, we believe, going forward will be in the range of $23 million to $24 million. And just to point out, there are some noncash items in that number around $3 million, primarily around stock-based compensation. So historically, we have grown at a CAGR, a compound annual growth rate of 32%. We did drop off in the 2025 to 11%, but our objective for this year and years going forward is to get back on that curve, somewhere north of 20%.

Our guidance at the top end is right at 20%. And what we would what to achieve over the next couple of years is to get back to where we're growing at 20% to 30%. We've talked about the gross margins. They have historically stayed above 80. And as I indicated, we fully expect that to continue even with the product mix impact going forward. Cash use, we've been disciplined. We've reduced the amount of cash that we use every quarter for the last 3 quarters. from $10.1 million in Q1 to Q2 to $5.1 million in Q4.

And just to note that there will be -- that will uptick in this first quarter. The cash use will go up because of a reset of employee benefits, payroll taxes and bonuses that we have to pay. But once we get through this first quarter, and we start growing at the revenue rate that we think we're going to. That cash use will go down to a point where we will cross over to cash flow breakeven at some point. We aren't giving guidance at this point in time. But towards the end of the year, we will get closer and closer to that breakeven point.

And once we once we can see that, for sure, we will give everybody that guidance of when we're going to cross over. And then the last thing I want to talk about, and Terry mentioned it, we did have a credit facility with OrbiMed. We entered into that agreement in 2023. And we -- when we entered into that, we set the revenue covenants at some revenue that was unachievable going back now. So every quarter last year, we were running up against those revenue covenants and having to do an amendment or a dual waiver and it just caused a lot of distraction that we needed to solve for.

And so we went out and found another credit facility with Perceptive Advisors, a strong health care lender in the United States. We've entered into an agreement with a total agreement of $60 million. We took down $50 million at close. And the objective was to -- the main objective of doing a new credit facility was to reset the revenue covenants.

For example, the first quarter of 2026 trailing 12-month revenue covenant of $68.5 million. And if you look at the results for the 3 quarters in 2025, we would only have to achieve $15.4 million to not us that revenue covenant and all of the revenue covenants for each of the quarters going forward for the 5-year term are set with the objective of having enough headroom in those revenue covenants where we don't have to worry about it. The full year revenue covenant for 2026 is $73 million, which is significantly lower than even our lower end of our guidance of $80 million.

We also, at the time, reduce the cash requirement, the cash covenant down from $10 million to $5 million. We did add a little bit of cash to the balance sheet, around $6 million net but that was not necessarily the objective. The objective was to take away the noise that we had seen all through 2025 around the revenue covenants, which we have successfully done with this new credit facility. I'll now turn it back to Cary.

Thanks, David. Just as a reminder, I mean, this is our product portfolio. And I think what's important to understand is we are calling on these physicians every day. Our reps are in cases with them. and in a very consultative way. And so not only is there that higher touch in terms of helping them use the product, but there's an expense going on in resell, meaning physicians are using it for certain cases, certain size wounds.

Our reps are are committed to expanding that into different size, different types of wounds, expanding that usage within existing physicians. And then within existing accounts, expanding that to other physicians that don't currently use resell. So that is all ongoing. We measure internally utilization, one of our corporate goals and and something that we're pushing and measuring very intensely here in 2026 is the amount of utilization increase, the number of physicians that use it versus number of physicians that were using it what type of cases they use it for, how often they use it, all of that because those are precursors to increased revenue and penetration within existing accounts.

The great thing about the being -- having a very focused number of accounts is that we're already in 90% of those, meaning we have relationships with purchasing, with administration, with the departments and some physicians. And so you don't have to start that over again constantly. You really have to grow within the accounts that you're already in for the most part. And then, of course, we have 2 new products, Cohealyx and PermeaDerm. And so we are heavily engaged in getting adoption of those products. And most of the time that requires the products to go through a value analysis committee.

We currently have about 55 accounts that have Cohealyx in their value analysis committee. And the way this works is that we have a champion within the account that sees the value and the need for Cohealyx to be used and the advantage that it has over other dermal matrices. We provide them with as much data as we can economic benefit, clinical benefit, workflow benefit and others analysis committee and then it's evaluated over time. And then as it comes up, that same work with them to make sure that the facility knows that it's available, that it's validated and that they should start using it as extensively as possible.

Same thing goes with PermeaDerm. We have a number of them that are in value analysis committees, sometimes they aren't needed. But again, both of those will be aided as well as we go forward. Not so much that we need a lot more data for the value analysis committee, but from a quick adoption of both those technologies. The 2 studies that we have ongoing here will help us from a commercial standpoint.

Again, as a reminder, about the value of having 3 products, 3 products, the same call point, kind of the same discussion, quite often the same wound, same patient same physician. We are being consultative with the physicians. Quite often, it's not, it's science, but there's some art to it as well. And it's great when they have options in terms of working with Avida where they can use the PermeaDerm temporizing dressing to replace allograft in a more economic way and with some advantages as well. They can also on certain types of wounds use resell along with the split-thickness skin graft and then cover it with PermeaDerm.

And then ultimately, with the full-thickness wound, you'd use PermeaDerm [indiscernible] then you use Cohealyx to help vascularize the wound, they prepare the wound bed for grafting and then use resell split-thickness skin graft or not and then covered with PermeaDerm again. And you see the advantage that physicians have in utilizing those products for the patient -- for the patients healing impact, but also from a revenue standpoint, what it does for our company to have that same patient who 15 years ago would have just -- we only could have offered resell and that part of the treatment. But now from a revenue standpoint, that per patient revenue goes up substantially when we have these other products as well.

Again, 2026 is all about focus. It's about execution. If you think about all the things that happened in 2025, where we had the sales kind of reconfiguration and the focus on those 200 sites, you had a MAC issue or the MACs issue with CMS and the fact that physicians were not being paid. You had, frankly, guidance that was higher than it should have been set and things went slower than they should have done. And we had a CEO transition. We had a number of headwinds. I think some of our own doing and some from an external standpoint. But I think by the time we hit the end of 2025, some percent of that was solved, resolved and stabilized. And a company stable -- being stabilized and predictable is not all that exciting, but it is a precursor to the exciting things that are going to occur going forward. And it prepares us for growth, reduces the amount of headwinds and distraction and other things.

So our people, including our executives, can focus on growing this business, primarily in the U.S. but elsewhere as well. So we're focused on the U.S. We're focused on growing, but we also have made some inroads in other markets. do have a distributor in Japan. As you know, we have a distributor, a really good distributor in Australia. We expect RECELL GO to be approved very soon. That distributor is being trained as we speak and in parallel with that approval that's coming. We actually have a physician from the U.S. that's a heavy resale user that's moving to Melbourne. And that helps that sort of champion, that sort of influence and impact not only on the patients in Melbourne, but the physicians in Eastern, Southeastern Australia, I think, could be really impactful.

And we're in a handful of countries in Europe, and it's early days. We're less than 2 months. into that. Everyone's -- all the distributors have been trained. And while we were training those distributors, this Swiss nightclub fire occurred and we just jumped in. We sent people over there. We sent resources and product over there, and it really not only helped patients probably only a couple of dozen of them were treated with RECELL.

But also it brought attention to the fact that the day-to-day issues and wounds and burns that occur in these countries in Europe, could be better served by having resell predominantly in their country. And so again, early days there and more to come internationally. We're a data-driven company, a clinically driven company, and now to an economically driven company in terms of the types of studies that we have out there and the data that we utilize in conversations with our physicians.

If you think about how you get physicians to use not only more resell or more physicians to use resell, but then also Cohealyx and PermeaDerm's really multifaceted. You have to obviously have the clinical data. You have to have champions and examples and people on podium and abstracts written and presented on -- this patient came and presented and I did this, and it was a great outcome. And it's not just a great outcome for the patient and clinically, but it's a great outcome for the facility as well.

We talk about the physician payment being a difficult situation when we lost that clarity and we lost those payments last year. The hospital payment in utilizing resell, it's crucial that they get a set amount of payment. It doesn't matter if the patient is there for 2 weeks or 2 months. We have this moniker that says AVITA Medical healing at the speed of life. And what's so crucial about the speed at which patients heal is that everybody wins.

The patient wins, the patient has a great outcome and gets to go home the physician likes that as well, obviously, because they're caring for the patient. But the hospital gets their payment and then that bed opens up, they don't have to provide additional services. If that patient lingers [indiscernible] there longer has complications. So it's extremely beneficial. If you look at Cohealyx, for example, one of the advantages that we tout as we compete is that it's quick sooner prepares the wound bed to graft sooner than its competitors. PermeaDerm, sometimes it's just straight up.

If you look at the clinical studies. They are both 40-patient studies, Cohealyx, PermeaDerm 1. Because they're post-market studies, we can talk about them before they're published. They're going to publish towards the end of the year, but we're using them already at the [indiscernible] conference last month at the American Burn Association Conference in April. Physicians are utilizing that data in lung symposiums, on podium with abstracts, it's out there and our salespeople can use that data.

With PermeaDerm, there are a lot of reasons why they would want to use it. But sometimes straight up, it is easier to handle than an allograft, which is frozen needs to be processed in that way, but it's also less expensive. And we had a physician that said I think I can say our facility $0.5 million a year, if I just switched from allograft to PermeaDerm. And he said that in a lunch symposium with other physicians there. That's the kind of multipronged pressure that we're bringing to bear on our physicians to not only adopt utilizing resell more, for example, in the 36% length of stay reduction that has impact on strategic accounts and accounts that see the totality of the cost of care, not just as the cost of the product or even reimbursement.

But is their patients and how soon they can get them out of a facility. As an example from the [indiscernible] study, I want to show you one. So this is not an easy study or an easy case. So a lot of times, people show a nice healthy individual that was wounded and we applied a treatment and it healed really well. Well, a 91-year-old is not predisposed to healing easily or well. And so this 91-year-old female injured her leg. And it basically presented a gap between her skin and there is a separation and a void between her skin and down to the fashion. So that can't just stay because then everything starts to die.

And so you can see where the wound is, where the injury is, but then you can see the donor site. And we talk quite often about resale being this 80:1 ratio. With a very small and thin donor site. In this case, you can see that's not 80:1, but that donor side is both for resell, but it's also for a split thickness skin graft that they end up meshing to put over the injury at a 3:1 ratio, but then they spray resell over the top of it. So this is an example of a physician using all 3 of our products on a patient for a great outcome.

Next slide, warning, it's a little graphic, so I apologize. But you can see on the left, there's the wound. You can see them in the chronic skin that all needs to be cut away and down to the fashion that image on the right of that injury is that excise wound. Then in the middle there, you see Cohealyx placed down the wound. And so again, the idea of Cohealyx is to prepare a nice vascularized wound bed that's prepared for grafting. Nice living wound bed. And so that's exactly what happened. You can see how nice and red that is, how clean that is. ready for grafting, which is exactly what happened.

You can see kind of that mesh look on the screen, that's the skin graft and then they put slits in spread it across the wound at a 3:1 ratio in this case. And then we spray resell over the top, you put PermeaDerm, you can see the result on the right, which is amazing, again, for -- we all know 91-year-old that skin is very thin and it's really difficult to heal. One thing that doesn't get talked about is the the donor side itself.

The donor site itself can be quite painful. But in the case of RECELL, of course, we -- first of all, we take a thinner sample, number one. Number two, as they're spraying the wound bed, then they go back and spray the donor side as well because that needs all the help it can get, especially in the 91-year-old, so for the donor site, you can see below spray it with resell and put Permian Derm over the top. And after a few weeks, that's the result. So a really positive result for a 91-year-old an example of a physician using all 3 of our products to have that kind of result.

Again, finally, I think it's important for a company to on a quarterly basis to go back and to discuss what we said, what we said we were going to do and to do that. to then go ahead and execute according to plan, according to what we've committed to. I think you can expect that here at the company. Three months ago, I came and I talked a lot about what was going on, what I was going to do. And I'm doing a little of that today, too. talking about last year, what we've solved, what we've prepared.

And I look forward to next quarter talking a lot about the numbers and the progress and being judged by the kind of progress that we're making in the field around utilization and increased revenue in all 3 of our products. And so I look forward to doing that in a few months. And with that, I'd love to take some questions as well.

Thank you, Cary. We'll now move on to investor questions. If you have any questions, you can continue to submit them by using the Q&A function. I'll now hand over to Ben Atkins to run the Q&A.

Thanks, Rudi. Good morning, everybody. there in Australia. What I'm going to do is I'm going to start by reading out the questions that were submitted as part of the preregistration and we have about 5 or 6 there. and then I'll turn to the Q&A on the Zoom today for any questions that are being asked live.

So Cary, first question to you, and it relates to the VAC. And it's a 2-part question, both for Cohealyx and for RECELL. The question is how many VACs are evaluating Cohealyx? And the second part is, are there still hospitals among the key 200 that need to go through the VAC evaluation process before they can use RECELL. And if so, how many of those -- how many and how many of those have already begun the evaluation process?

Okay. Well, first of all, I'll take the second one first, that we're not going through the back process with resell. That's been done. We are straight up selling to physicians, and we're in expansion mode with resell. From Cohealyx standpoint, I mentioned the fact that we have about 55 of them in the back process right now. And just to understand how long that process takes. It can take anywhere from 2 to 5 months, usually, it just depends. What we try to do is everything with our power to move it along as quickly as possible. The other thing we try to do is get it into VAC as quickly as possible, but we also own that space once it comes out of that, meaning that everybody needs to know it came out. We need to prepare the physicians while it's in back, let's say, in the case of Cohealyx to be comfortable using it extensively, as extensively as possible. So the scenario you don't want is to get into VAC once it comes out of VAC for a physician to say, okay. Three weeks later, they realize that it's actually out and available for them to use or that the buyer says they can actually buy it. And then they put a kind of toe in the water and they use it on this kind of wound and then it takes another 3 months before they're just kind of full board using it. And so what we're trying to do is reduce all of that with our salespeople. And what we're generally seeing is about a dozen coming out every quarter. it varies, but that's why those 55, I think we'll see over the coming 2026, where they just work their way out every quarter, and we'll gradually have a lot smaller number that are still in VAC.

Question two, Cary, it's for you again, I think. The question relates to some changes under Medicare, perhaps more for the chronic wound side. But let me ask the question out loud Medicare established a flat standardized payment rate of approximately $127.28 per square centimeter from 2026. Has this benefited resell go adoption and usage rates thus far?

Yes. I mean, you're correct, Ben, that it's primarily for the chronic wound space, I mean, because resells reimbursed under CPT codes, and we've talked about that with the MACs. So you have the facility, DRG payment and then you have the physician payment as well that's done through the MACs. And so that's what we're getting from a reimbursement standpoint as it relates to resell.

Cary, another question for you before I have a question for David. One of our [indiscernible] which was keen to understand the key reasons for the slow momentum and meaningful progression to sales and market capture, some of which you've already, I think, reflected on in the presentation, the second part to this question is, if you could also highlight how we are progressing against incumbent alternate options and products.

Yes. So RECELL, as I've said, is -- has been around for a good while and largely in a manual way. I think that -- if I look at progress in RECELL, it's -- there are a handful of reasons why a physician might not use it or might not use it yet and some are convinced with additional data or peer pressure or whatever it might be. So we're leveraging all of those things, finding those pain points, finding ways to convince them. That's what our salespeople are doing every day, getting internal champions. -- getting people speaking at these conferences convincing people, this is the best standard of care. So that's resell. And recall is kind of a one-of-a-kind change the way you practice medicine kind of product, which is great, and we love it and our people love competing against the old ways. I think as it relates to Cohealyx and PermeaDerm, we don't shy away from the fact that there are a lot of other derma matrices, a lot of other dressings, a lot of other choices they have. It's a different type of selling. And the way you do that, number one, is you get them through VAC as quickly as you can so that you can play in the marketplace at those accounts? And then just like any other kind of selling, you try and find the distinct advantages. In the case of Cohealyx, number one is speed to graft. And speed to graph is important not only to the physician, but to the the patient. It's also important to the facility because it does play a role in that continuum of care for that wound and that patient to get them out faster, healing faster. But there's also economic benefit depending on who you're competing against. But -- and then as I said, PermeaDerm used the example of really gating against allograft and keeping it simple. In terms of money that they can save and advantages that it has. Why this low uptake? Well, again, if I mentioned to you that we have -- all of our products are new. And again, I'm not claiming that RECELL is new, but I'm saying RECELL GO is new. And even though it's automated, anytime you launch a product, there's always kind of a change and there's a necessity for real messaging and care in that process. So you have 3 new products, and it takes a bit. It takes a bit to have those conversations to get them through the VAC. And when you disrupt the sales force, I feel like we optimized it but it's still a disruption. And we need to disrupt that, it causes delay. And so for me, I'm trying to remove all the delays, all the distractions, make sure they have exactly the messaging they need, the focus they need, the quotas they need to just get up every morning and execute and be influential in their accounts.

Just as a reminder, before I ask the next question, if you do have any questions, please just add them to the Q&A, and we'll get to those shortly. David, this next one for you, and it's a 4-part question. So I hope you have a pen and paper there. A few questions. First, what is the road map to profitability? And I think second to that first part, cash flow position. Third, an update on operational cost reduction -- and fourth, any future capital funding that you think might be required to be raised within the next 18 months, if you can comment on those 4 areas, please?

Thank you, [ Ben ]. So our path to profitability is really driven by 3 things. And it's pretty simple. It's driven by revenue growth. And it's also driven by disciplined operating expenses, maintaining where we are at this point in time. and then maintain a high gross margin percentage. And we've taken care of our cost structure at this point in time. It is set. We don't see any need for additional headcount in our commercial area. We don't see an additional need for cost in G&A. R&D at this point in time is really focused on fishing our clinical studies, PermeaDerm and Cohealyx. And we can see that potentially over the next 18 months, our R&D costs may go down. So we've taken care of the cost structure to a point where -- the only thing we really need to do to get cash flow breakeven and profitability is to grow our revenue. And Cary's talked a lot about how that's going to happen. And if we're starting out with a $17.6 million revenue from Q4. Sequential growth growing to our guidance number of $80 million to $85 million. We will get to cash flow breakeven and profitability. We're not giving guidance at this point in time on when that's going to happen, but it is in the future. And our objective is to get to cash flow breakeven, get to sustainability internally from a cash perspective without raising additional equity. That's not to say that we may not at some point in the future, we may have a reason to raise additional equity. But we have enough cash on the balance sheet right now. And our objective is to grow revenue such that we can get to a point where we're not using any more cash, but we're actually generating cash on a quarterly basis. So I think I've answered those 4 parts, Ben. I'll leave it there.

I'm going to ask the last of our preregistered questions. And this one, again, is for you. and it relates to vitiligo. Vitiligo was previously highlighted as a major long-term value driver. In the recent materials, the focus has shifted almost exclusively to the staged wound pathway. Does this signal a formal deprioritization of the Vitiligo commercial effort?

Yes. So our vitiligo commercial effort is deprioritized. And I think we have a mission at this company to help patients heal to be there for our patients and our clinicians. We're patient-focused in customer-centric at this company. But I say that, but we have FDA approval for stable vitiligo. Right now, the reimbursement for that procedure is uncertain and steady too low and it's really impossible to say that we're going to have a priority of going to market for a product that's not reimbursed or that there's not sufficient payment to make it advantageous for us to do so. I think if that changes, we would love to be able to address that market. I think there's been discussion in the past about if there was cash pay. Could it be utilized? Yes, obviously, it is FDA approved. But from a focus for us, it's just not going to be a focus for us until the economics change.

Okay. I'm going to turn now to the questions and answers that have been submitted while we have been on this call. And I have a couple here. So I will start with the first that we received. This could be a question, I suppose, Cary or David, if you wish to follow up, but there have been various rumors circulating about acquisitions. What is the process for evaluating any inquiries from possible buyers and the general view of management and the Board as to entertaining an offer.

Well, the general view is that that we're running the company to grow the company and to strengthen the company and to drive value creation. And so anytime you're a company that does that, you're going to have people interested maybe in your technology or your company. First of all, we're not in a good position for that sort of a thing, number one. Number two, we're not looking forward. our board, our management, our company wants to grow and get to cash flow positive and be on a trajectory that's as an independent company. I think any kind of M&A inquiry or strategic discussion about any partnerships, anything like that. They can come in, but we're not we're not interested.

David, this next question, I think, is firmly for you and relates to the [indiscernible] covenants. The question is the rate of increase for the TTM covenants is substantial. For example, it is set at $140 million for the period ended December 31, 2030. How will you meet these requirements?

That's a great question and it's hard to answer the question. Those revenue covenants were set with the expectation that we would be getting back on a 20% revenue growth per year. And if we're on even a 20% or greater revenue growth, those revenue covenants are fully achievable in 4 years. compounded annual revenue growth rate at 20% over the next 4 years, gets us way past $140 million. So it is all about revenue growth, and it's a conservative revenue growth based on our historical CAGR and where we want to get back to and where we think we can achieve. And specifically, we have a large total addressable market in all of our products and the revenue growth, doubling our our percentage of penetration into resell only, which is about 15% would get us to $140 million very quickly. So that's how we're going to do it. And we set those revenue covenants with advisers with Perceptive Advisors to make sure that even in 2030, we aren't going to be tripping them.

Thank you. Well, that completes all of the questions that were either submitted prior to the call or during the call. So unless anyone has a question in the next few moments, I will end the Q&A there. And Cary, I'll hand back to you for any final thoughts.

Okay. Well, first of all, thank you all for your support and engagement as investors or potential investors in the company, those that follow the company, root for the company. I think as a Board member, as Chair of the Board, myself, I've always wanted the company to succeed in a very big way. And I think that last year was difficult and is difficult for the stock price, it was difficult just as a company, but I think what we'll see looking back in '25 is that we handle a lot of our business, a lot of those issues and that we weathered that storm with 11% growth and that it's a one-off of a year that I wouldn't expect to come again and that we'll get back on the trajectory that I think everybody expects from this company.

I think the company is undervalued. I think that we're very -- we have a very low level of penetration within those existing accounts and that we are laser-focused on execution this year and expect that as we revisit every quarter that we'll have some good things to talk about. So again, thank you. I look forward to talking to you some more in the months to come.

Good day, and thank you for standing by. Welcome to the AVITA Medical, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Ben Atkins. Please go ahead.

Thank you, operator. Welcome to AVITA Medical's Fourth Quarter and Full Year 2025 Earnings Call. Joining me on today's call are Cary Vance, Interim Chief Executive Officer; and David O'Toole, Chief Financial Officer.

Today's earnings release and presentation are available on our website at www.avitamedical.com under the Investor Relations section.

Before we begin, I would like to remind you that this call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results to differ materially from any expectations expressed or implied by the forward-looking statements.

Please review our most recent filings with the SEC for comprehensive descriptions of the risk factors. Any forward-looking statements provided during this call are based on management's expectations as of today.

I will now turn the call over to Cary.

Good afternoon in the U.S., and good morning in Australia. Thank you for joining us today. Before we get into the numbers, I want to start by coming back to how we closed the last call. In Q3, I ended with 3 priorities: driving disciplined execution, refining our commercial focus and positioning AVITA for growth in 2026.

The fourth quarter was about delivering on those commitments. You can see that summarized on the slide in front of you. We exited the year with a more disciplined operating model, improved visibility into cash use and a clear understanding of how our customers adopt and use our products.

We refined our commercial focus around utilization in our core burn and trauma centers. And importantly, we removed sources of friction, reimbursement uncertainty and restrictive balance sheet constraints that had weighed on execution throughout 2025. These are not headline outcomes on their own, but together, they matter. They make the business more understandable, more forecastable and more repeatable.

As we walk through the quarter today, you'll hear how those execution priorities show up in the numbers, in our operating cadence and in how we positioned heading into 2026.

Turning briefly to the results. We reported fourth quarter revenue of $17.6 million and a full year revenue of approximately $71.6 million. This represented about 11% growth over 2024 and was in line with our updated revenue guidance.

From my perspective, the fourth quarter was less about acceleration and more about control. The numbers reflect the business that is operating more predictably and with greater discipline. David will walk through the details in a moment.

A major focus throughout 2025 was resolving reimbursement uncertainty of RECELL. As of today, 6 of the 7 Medicare administrative contractors have published payment rates for RECELL procedures. This removes a key constraint that weighed on utilization throughout the year and has begun to restore confidence for clinicians.

As we said last quarter, predictable reimbursement, not only for our products, but also for the clinicians who use them is what allows our strong clinical and real-world health economic data to translate into routine standard use of RECELL.

With that clarity in place, we are now seeing early signs of utilization beginning to normalize as accounts reengage. Ultimately, growth in this business is driven less by adding new hospital accounts and more by increasing adoption, utilization and repeated use of our products, RECELL, Cohealyx and PermeaDerm by clinicians.

Roughly 90% of our revenue today comes from about 200 burn and trauma centers. We've aligned sales incentives, forecasting assumptions and field activity around earlier adoption and repeat use within these core accounts. We've also continued to shift away from bulk ordering toward more organic monthly usage patterns. Utilization matters because it creates predictability for clinicians, for hospitals and for our business.

As we look ahead, utilization will become an increasingly important way we evaluate execution internally. Today, the focus is on establishing the right operating cadence and doing the fundamentals well. So progress can cascade and compound over time. That consistency is supported by the breadth of our platform.

Our strategy is built around a single integrated platform, RECELL, Cohealyx and PermeaDerm used repeatedly by the same clinicians across multiple patient episodes. RECELL remains the foundation of our business, supported by extensive clinical evidence demonstrating faster healing, improved outcomes and shorter hospital stays.

The Cohealyx-1 post-market study is now fully enrolled and the PermeaDerm-1 study is nearing full enrollment. These studies are designed to generate practical real-world clinical and economic evidence that reflect how surgeons use these products in wound care with data expected later in 2026.

At the 2026 Boswick Burn and Wound Symposium last month, investigators presented early findings and case experiences from these studies. Also notable, 2 cases presented from the podium reported all 3 of our technologies, RECELL, Cohealyx and PermeaDerm used together on individual patients. This reinforces that our strategy to evolve from a RECELL-only story to a multiproduct acute wound care platform is translating into real-world clinical practice and higher revenue per patient opportunities.

Outside the U.S., we are taking a disciplined distributor-led approach as we build our footprint in select markets where there is clear clinical need and the right regulatory and operational foundations in place. Since receiving CE Mark approval for RECELL GO last October, we've supported initial clinical use in a small number of European markets, focused on establishing familiarity and operational readiness.

In the aftermath of the tragic nightclub fire in Crans-Montana, Switzerland, our teams and distribution partners were able to respond quickly to requests from surgeons because those foundational elements were already in place. Our role in situations like this is to remain responsive and reliable in support of patient care under extraordinarily difficult circumstances. We will continue to partner closely with the burn community to help ensure access to RECELL where and when it is needed.

As David will walk you through, our commitment to execution discipline is reflected in our financials, particularly in our cost structure, cash use and balance sheet. In January, we refinanced our debt through a new credit facility with Perceptive Advisors, LLC. This was less about adding capital and more about removing the distraction of restrictive covenants so the organization can stay focused on execution.

Turning to 2026. We expect full year revenue of $80 million to $85 million, representing growth of approximately 12% to 19% over 2025. This outlook reflects normalization of RECELL utilization, expanded portfolio use within core accounts, contributions from Cohealyx and PermeaDerm and a more predictable operating environment. This is execution-led growth driven by consistent delivery quarter-by-quarter and not onetime events or aggressive assumptions.

With that, I'll turn the call over to David to walk through the financials in more detail.

Thank you, Cary, and good afternoon, everyone. As Cary outlined, the fourth quarter marked the close of a year of stabilization for AVITA and the transition into a more execution-focused phase of the business. I'll walk through what that execution discipline looks like in the numbers, particularly across cost, cash use and our balance sheet.

Turning first to the full year view for 2025. We reported revenue of approximately $71.6 million, representing 11% growth over 2024. This marked a further consecutive year of revenue growth for the company and reflects a business that continued to grow despite the reimbursement-related headwinds.

Full year gross margin was 82.1% compared to 85.8% in 2024. This decrease reflects certain inventory reserves and impact from product mix and the increased contribution from Cohealyx and PermeaDerm. As we previously discussed, while the product mix impacts the reported margin percentage, these products contribute incremental gross profit without a commensurate increase in operating expenses, supporting operating leverage over time.

The combination of year-on-year revenue growth and gross margins above 80% provides a solid foundation for us going forward.

Turning to the fourth quarter. Total revenue was $17.6 million compared to $18.4 million in the prior year period. This was consistent with our revised revenue expectations and showed stabilization within our business. Fourth quarter gross margin was 81.2% compared to 87.6% for the same period last year, driven by inventory reserves and product mix.

Moving to operating costs. Total operating expenses in the fourth quarter were $24.7 million, down 5% year-over-year. This reduction was driven primarily by lower sales and marketing expenses, reflecting reduced headcount, compensation and commissions following the commercial transformation earlier in the year.

General and administrative expenses were essentially flat, while research and development increased modestly due to planned investment in our PermeaDerm and Cohealyx post-market studies. The fourth quarter included $1.2 million of onetime severance costs, which will not be reoccurring. Excluding these costs, fourth quarter operating expenses were down 10% year-over-year.

For the full year, even with the nonrecurring severance costs included, operating expenses declined by $10.4 million or 9%, reflecting a substantially lower operating structure going forward.

Turning to cash. The key takeaway here is improved control and visibility around cash use. The fourth quarter marked the third consecutive quarter of improvement in net cash used, declining from $10.1 million in Q2 to $6.2 million in Q3 and $5.1 million in Q4. As we look towards the first quarter in 2026, cash use will increase due to the timing of annual compensation and payroll-related items, which is expected and planned for within our operating model.

We ended the quarter with $18.2 million in cash and marketable securities. In January, we refinanced our debt through a new credit facility with Perceptive Advisors, LLC. The levels and flexibility in this facility are meaningfully better aligned with our current operating trajectory. Under the new agreement, the revenue and cash covenants provide substantially more headroom.

To put that in context, the initial trailing 12-month covenant of $68.5 million translates to only $15.4 million of revenue in Q1 to not trigger the revenue covenant. For the full year 2026, the trailing 12-month requirement of $73 million is aligned significantly below our 2026 revenue guidance.

In addition, the minimum cash covenant has been reduced from $10 million to $5 million, significantly lowering covenant risk and reinforcing that the facility was structured to support execution rather than constrain it. The facility is interest-only with no amortization and includes optional incremental capital, if needed, subject to meeting a certain revenue milestone.

Overall, this refinancing was about simplifying the balance sheet, reducing friction and removing distraction. From a financial perspective, our priorities for 2026 are straightforward: maintain disciplined control of operating costs, support revenue growth with a stable and scalable cost structure and continued cash efficiency as revenue increases.

Through that financial framework and improved capital structure and a clear line of sight into 2026 growth, we believe AVITA is better positioned to execute consistently and move towards financial sustainability.

With that, I'll turn the call back to Cary.

Thanks, David. In summary, the actions we've taken over the past several months have positioned AVITA for a stronger and more consistent 2026. We've restored reimbursement clarity, simplified our commercial focus, removed operational friction, strengthened financial discipline and advanced the clinical evidence underpinning our multiproduct platform.

Those actions set the execution milestones we'll report against throughout the year. As we move through 2026, our focus is straightforward. Do what we said we would do, report it clearly and let execution speak for itself.

With that, let's open for questions.

[Operator Instructions]. And our first question comes from the line of Ryan Zimmerman of BTIG.

On the guidance, David, with the new revenue covenants, how would you have us think about the pace of growth through the year? Is the 15.4% a good jumping off point for Q1? Or are you trying to message that that's well below kind of what you can do, and so there's no covenant risk there? I think that would be appreciated. And then I have a follow-up.

Yes. And I'm sure Cary may have a couple of things to say also. But the $15.4 million shouldn't be taken as anything around guidance at all, Brian. What we're trying to do is what you indicated is say that there's a lot of headroom for that -- for the covenant number of $15.4 million. We had $17.6 million in the fourth quarter. We wouldn't expect to go down that much in the first quarter. We've given guidance of $80 million to $85 million. And even if you annualize that just over 4 quarters, you wouldn't get to anywhere close to that $15.4 million number.

So we're not giving quarterly guidance, as you know. But that $15.4 million was just to tell everyone that this -- the new debt was structured to take covenant risk off the table, and that's what we've done.

Go ahead, Cary, sorry.

Yes, Ryan. So yes, I would just kind of pile on to that. I think that our jump-off point is Q4. I mean what we strive to do in Q4 is to kind of normalize and kind of flatten things out in terms of the ordering patterns and our ability to forecast.

And so we feel good about not only the performance of Q4, but our handle on the business to the point where we were able to, I think, understand Q1. And I think so far, we continue to understand Q1. So I think from Q4 to Q1 and from Q1 through the rest of the year, you should see progressive growth, gradual acceleration. And I think we have a good understanding of our business and more to come on that.

Appreciate that, Cary. And then we could spend a minute on the reimbursement dynamics that affected 2025. So it sounds like much of what hampered 2025 with the MACs behind you. But if you could give us a little more color into kind of the reestablishment of payment from the 6 of the 7 MACs.

Are you -- what do you have now that you kind of say with certainty? And what's holding up that seventh MAC? Is there anything we need to be concerned about? Or is it just something administratively? And maybe you could just spend a little bit more kind of talking through kind of what has transpired over the last, call it, quarter and into the first quarter?

Sure. So first of all, we're highly engaged with all 7. I think that we could put these in buckets, meaning we got commitments months ago that they would publish, then they did publish. And then once they published, it's a matter of kind of hospital by hospital, physician by physician, them becoming aware and then putting it into practice in terms of getting reimbursed and kind of returning to a clarity that will help us going forward. So that's occurred as each of the MACs kind of came on board.

In terms of that seventh one, we're highly engaged with them. That's all I can tell you is that there's no reason to be concerned, just that we're engaged with them in a process in their process, and we're hopeful and expect that they will publish as well.

Our next question comes from the line of Josh Jennings of TD Cowen.

Congratulations on all the progress on the refinancing and great to see the 60 7 MACs have established payment rates. I wanted to just ask about, first, just can you share with us just a core customer experience where Cohealyx and PermeaDerm have made it through the back process? And are you seeing signals or what signals are you seeing that giving you confidence that there ultimately can be strong Cohealyx and PermeaDerm attachment rates in RECELL cases?

Yes. I mean I think the -- thanks, Josh. I think the process is that we have a champion in some of these accounts that -- for PermeaDerm and/or Cohealyx, and we work with them from a clinical perspective, economic perspective to help them understand the value. And then it's put in the back and that champion helps move it along. And the idea is that once it comes out of the back that, that same champion then starts to push it into the department and into their practice.

And so we've seen that in a few of the MACs that have come -- or I'm sorry, a few of the MACs where those products have exited. And that's been effective in terms of us getting some uptake out of the back.

Excellent. And is there kind of an all-star account where Cohealyx and PermeaDerm have made it through that back process and you're seeing nice attachment rates on RECELL cases?

Well, no, I probably can't point to one right now. But I would say that when we were at the Boswick Burn Conference, as I said in my comments, that there were a couple of presentations on -- from physicians that used all 3 of the products, RECELL, Cohealyx and PermeaDerm. And I think that, again, is early days in terms of someone using all 3 of those, but I think we'll be able to report out more going forward as these products come out of the back and as they're starting -- as they begin to be used in conjunction with each other.

Understood. And you still have Cohealyx-1 and PermeaDerm-1 study data to help with that utilization trajectory? And just ultimately, I mean, do you see Cohealyx and PermeaDerm adoption driving increased demand for RECELL as well? Just -- I mean, I've been thinking about RECELL pulling through Cohealyx and PermeaDerm but down the line, could Cohealyx and PermeaDerm get into more accounts or just drive utilization higher in some -- in the 200 trauma/burn center base?

Yes. I mean it's a good question. I think RECELL is the established brand. It's the product that's been around the longest. But ultimately, we have relationships in these accounts. We have physicians that are using RECELL that I think, are at least drawn and open to the discussion around Cohealyx and PermeaDerm because of the relationship we have and because of their affinity for RECELL.

But you're right, I think that those physicians that may not be using RECELL or even institutions that may not use RECELL, if they're drawn to Cohealyx or we end up really making some progress there, of course, it allows you to make a connection and establish a relationship there and have the dialogue around treatment and care that could lead to a RECELL discussion as well.

Excellent. And maybe just lastly, just I think -- I mean I know the answer to this, but just want to check the box with some of the turbulence around MACs and payment rate for RECELL, just as you start to see adoption utilization of Cohealyx and PermeaDerm over the course of 2026, just review the reimbursement pathway. And then I think there's a clear pathway. There's not going to be any hurdles, but just to, again, check that box. If you could lay that out for us, that would be great.

Yes. I mean, again, I think you're correct. I mean we've had to deal with these physician payments through the MAC over the last year, but we don't expect any other disruptions to that process going forward other than continuing to work through these in the months to come.

Our next question comes from the line of Ian Arnt of Lake Street Capital Markets.

I was wondering if you guys could break down the primary drivers of growth supporting your 2026 guidance. Specifically, how much is predicted on the recovery in those RECELL lines versus contributions from Cohealyx and PermeaDerm launches?

Would you mind repeating that? It's a little bit quiet. It's hard to hear that question.

Yes. Sorry about that. I was wondering if you guys could kind of break down the primary drivers of growth supporting your 2026 guidance, specifically how much is predicated on the recovery base -- recovery in base RECELL volumes versus new contributions from Cohealyx and PermeaDerm launches?

Yes. Thank you. It will be mixed. I mean we expect that we expect growth in all 3 product lines, and we expect most of that to be driving increased utilization within existing accounts, whether that's additional physicians or additional types of procedures. So we see that trajectory in terms of utilization and have that plan in place. And so we expect all 3 product lines to grow, and we expect them to grow mostly within existing institutions where we have relationships going forward throughout the year.

Okay. That's very helpful. And I got a quick follow-up, if that's okay. In the third quarter, you guys noted that roughly 1/3 of your target accounts were in the VAC review for Cohealyx. Could you provide an update on the conversion rate of those reviews and the active ordering accounts? And are you seeing any specific bottlenecks in the process?

Any -- I'm sorry, am I seeing -- currently, we have I'm sorry, currently, we have how many in Cohealyx VAC? Is that was your question?

Yes. Just based off of the comments from the third quarter, if you could give an update on the conversion rate of those reviews that are now active ordering accounts. Are you seeing any bottlenecks in the process? Or could that delay the 2026 ramp?

Yes. So without just kind of giving a number, though, I would say that they continue to come out of VAC, Cohealyx VAC, at a kind of a steady rate, and we would expect that over the next, I would say, 6 to 9 months even. And so as they come out of the VAC, they are starting to order product. And so for us, that is going to be a continual kind of week-by-week, month-by-month, quarter-by-quarter process of anticipating and understanding that they will come out of the VAC and when they do get them to order sooner, larger, faster and to have a very positive experience with it, obviously, as well and to develop more than just that one champion in the account so that it can broaden and deepen. But we're not -- what we're not seeing in the VACs is bottlenecks other than administrative bottlenecks.

It's just they go through their process, and there is no set time. It depends on the account. And we provide them with all the information, whether it be clinical or economic to make the argument that it should successfully go through the VAC. So we haven't seen denials through the VAC really, but it is a process that takes some time, and we've seen that.

This concludes the question-and-answer session. I'll now turn it back to Cary Vance for closing remarks.

Thank you, operator. Thank you to everyone else who has joined us today as well. I look forward to updating you on the progress in the quarters to come. So thank you. Have a good rest of the day. Thanks.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good afternoon, and thank you all for joining us this week at the JPMorgan Healthcare Conference. My name is Andrew Lang and I'm an associate here on the JPMorgan Healthcare Investment Banking team. It is my pleasure to introduce AVITA Medical and its CEO, Cary Vance. We'll have a short Q&A session afterwards. But Cary, turn it over to you.

Thank you, Andrew. Good to be with you all this afternoon. I've been involved with AVITA Medical for about 3 years. I joined the Board 3 years ago and then became CEO 3 months ago. So the reason why I joined the Board, the reason why I love being a part of AVITA is the mission that AVITA has. We're all about patient care. We're a patient-centric customer-centric organization. I think you'll see some of that. I've been involved in a lot of different companies where we try to change health care and bring new standards of care to patients. In order to do that, we really need to check a few boxes. One is, obviously, clinical data, clinically driven innovation. Logistically, workflow-wise, it needs to work for our customers. And then ultimately, there needs to be an economic benefit to them as well. And so I think we tick all those boxes, you'll see that as we go through the presentation.

Our customers and our patients depend on us in their worst times. We usually care for patients on their worst days. And that's illustrated. We are just dipping our toes in the water in Europe in terms of our expansion and just started that here in Q1. And really out of the box with the Swiss nightclub fire, we found dozens and dozens of burned patients sent to different countries in Europe and we've been more than happy to respond to that and have kind of answered the call for clinicians who were trying to treat those patients. And we've done that and continue to do that this month.

Forward-looking statements. Obviously, things can change, please reference our SEC filings. We're a therapeutic acute care company. So we operate in the hospitals, and we're procedure-driven. Same patient, same hospital, same doctor with a few different products that we offer for wound closure, for surgical repair, for burns and you'll see that. We're all about bringing value -- clinical value, economic value to our patients -- to our customers and their patients. And again, I think we'll talk about that as we go. 40,000 hospitalized burned patients every year. It's a large number. And still very few of those are getting, I think, the best standard of care, which is our RECELL product line. Along with RECELL comes a number of clinical benefits, but also economic benefits and a reduction in complications. Some of those economic benefits are in the form of reimbursement and some in terms of cost savings that come from reduced length of stay and reduction in complications. This is our product line.

We have RECELL, RECELL GO, RECELL mini. RECELL mini is exactly what you would expect. It's a smaller version for smaller wounds. But RECELL GO and RECELL has been around for a good period of time, a number of years. And it basically converts a small sample of a patient's skin into a larger coverage area for spray, skin and healing. We've added Cohealyx in the last year or so, which is a dermal matrix that allows for vascularization of the wound and preparation of the wound bed. And then PermeaDerm is a transparent biosynthetic dressing for temporizing the wound and for covering the wound. It has a unique quality that is transparent, allows them to see the wound bed and how it's progressing in healing.

This is an illustration of how you can use the products by themselves or in combination. Essentially, PermeaDerm can be a temperance dressing basically to cover the wound until they figure out what they're going to do. It also is used in combination with RECELL. So after you've treated the wound with RECELL, you can put PermeaDerm over the top to aid in healing. And then, of course, with a full thickness wound, you can use all 3 products in combination to prepare the wound bed, get closure and get healing and great outcomes for the patient.

Again, PermeaDerm, we're all about speed, speed to healing. So speed to healing is good for the patient, good for the clinician, good for the hospital. So -- the sooner they can get out of there, the sooner or the better chance that they won't have complications, things like infections and so on. If -- those of you that aren't familiar with RECELL, one of the advantages is that you take a very small donor sample. So a lot of times, patients complain that the donor site is more painful and destructive sometimes even than the wound itself. And so you can take a credit card-sized sample and you could use that to spray and treat the whole -- the patient's whole back, if you wanted to, about 80:1 ratio of the sample and its application. Again, we're very data-driven, very clinical driven company, both in terms of the data we generate in clinical studies, but also how we train and prepare our clinicians and customers to treat.

Again, it's about speed. And so in the case of Cohealyx, it can be ready to graft within about a week or so as opposed to with some competitive products, it can be up to 3 weeks. And so those that want to graft quickly, Cohealyx has a great advantage in that regard. From an economic standpoint for us, as we have, again, same patient, same hospital, same physician to be used -- products can be used independently and distinctly, but also in combination, you see that, that makes a difference in terms of revenue dollars kind of per patient per wound. So if you use PermeaDerm by itself, RECELL and PermeaDerm and then all 3, you can see the economics of it per patient and revenue. And this example is 20% TBSA.

For our company, there's a large addressable market of $1.3 billion. That's really comprised of the 200 key sites, the grafters in this country, the 120, 130 burn centers, the 50-60 Level 1 trauma centers. That's where we're focused. I think it's important for our company to focus in 2026. You'll hear me say the word execution quite a bit. We've done a lot of work around reimbursement, a lot of work in the regulatory space, a lot of work in partnerships and preparing for 2026. And then we've had some headwinds that I'll talk about, but essentially, we're all about execution in 2026 and focus and our sales team is focused on those larger accounts. And while we have relationships at 90% of those accounts, we're really only penetrated at about 5% across the 3 products. Even within RECELL, it's around the 15% range. And so we have a lot of work to do in the existing accounts that we have.

So while we'll drive RECELL growth and kind of introduce and drive Cohealyx and PermeaDerm through the VAC process, it's on us too to train and to sell even coming out of the VAC process our customers on Cohealyx and PermeaDerm. What's -- what we're also doing, as I said, is we're in Australia, we're in Japan. We're in a handful of countries in Europe. And so we're just starting early days. We have approval there, and we're moving through some distribution networks in Europe to make some headway. And this unfortunate event in Switzerland has really brought notoriety to the product to some degree. And so while we help them, I think the opportunity for us to help on a more regular basis outside of that event, I think, will happen during the course of this year.

As I said, it's important for us to be a data-driven company. It's important for us to tick all those boxes to be successful in hospitals. Again, improved clinical outcomes, shorter hospital length of stay. So we're reducing time in the ICU, et cetera. Reimbursement, obviously, with every med tech company is crucial, not only the amount of reimbursement but the reliability of reimbursement, the predictable nature of them getting paid. We are -- we have category 1 code, CPT code. But the adjudication of those claims and the execution of that code has been difficult in 2025. CMS pushed that to the MAC, the Medicare administrative contractors, and then they have been somewhat slow to actually publish those rates. And so right now, as we sit here in January of 2026, 4 of the 7 have published, the other 3 are promising publication by the end of January. And so our job as a company is to educate our physicians and our customers as to how that's moving along, how they can count on those payments coming soon because it's somewhat disrupted our progress in 2025. As you might expect, when physicians all of a sudden aren't getting paid, they let us know when they change their behavior. And so we're in the process of fixing that.

We have two post-market studies in process. We have a Cohealyx-1 study, which evaluates the ability to prepare the wound bed and the readiness for closure. So that is fully enrolled. We have PermeaDerm, which looks at cost reduction as a result of using it versus allograft. That's 75% enrolled. So because they are post-market studies, I would expect that the data that's coming out of that to kind of be shared throughout the course of the year. And a lot of that will be finalized towards the end of the year. We have an opportunity at Boskirk Conference in a couple of weeks. We've got 19 abstracts there. At the American Burn Association in April, we've got 14 abstracts there. So we'll be sharing that clinical data with those in attendance.

Again, this is length of stay and it's real dollars. I think some of the data that we've shown is on average or as an example, can save them up to $42,000 at 5 fewer days in this example. So it's a 36% reduction in length of stay. Not only does it save them money when they're out sooner, but it opens up beds and that restriction that comes with it.

Behind every data point is a patient. This is an example of a patient who tried allograft and it failed. And you can see not only the effectiveness of treating that wound but the pigmentation that comes a year out, which is pretty impressive and with just treatment of RECELL alone. The company itself was on a pretty strong growth trajectory, and we ran into a handful of headwinds last year. One is this reimbursement uncertainty piece in terms of physician payments. The second is Cohealyx getting stuck in the VAC process, right? So that's all been -- we've been working through that. We also kind of restructured our sales force to focus on those 200 sites. With that comes some disruption itself. And so you see we're on a 29% CAGR over time. And so what we see in 2025 is there was growth, but it was modest growth. And what we see is we're going to return in 2026 to the kind of trajectory we were on before. And so we preannounced our guidance of $80 million to $85 million in 2026, and we expect to get back on track that way.

We also preannounced or announced yesterday morning a refinance of our debt. So we had an existing debt structure that we refinanced with Perceptive Advisors. We added some dollars to our balance sheet. But more importantly, we worked with them on, I think, more friendly terms in terms of revenue covenants and cash covenants that are more in line and gives us a buffer throughout the year. I mean I think that many of you know as a leader of a company, you're trying to remove distraction and trying to simplify so we can execute. And so this debt facility we had prior was every quarter, we were bumping up against it, and it was causing a lot of extra work and a lot of distractions. So we've solved that through this -- through our partners at Perceptive Advisors. So those are the terms of the deal. Again, those revenue covenants are well within our guidance and expectation is those won't be an issue from quarter-to-quarter. And I know that they nor I want it to be an issue. So again, it gives us some working capital as we grow our revenue as we manage our cash, it's not something that we're going to have to worry about here in 2026.

Again, in summary, I think it's important to have a great product. I think that, yes, we have a quality sales team. Yes, we have focus. We're focused on execution. We have a portfolio now of products. But I think RECELL is a flagship product like no other. I know that over the last few months, I have visited with physicians. And I've never seen a product that they love so much and a company that they're rooting for so much as RECELL and the impact that it makes on clinicians. And this is an industry in burn. That's a very close-knit, very passionate, and they care quite a bit about their patients and that whole continuum of care. And I think RECELL gives them a vehicle to really help and give them gold standard of care. Again, we have to address the financials with hospitals, ever more, it's important. And so because of that, we've got a reimbursement where we need it to be and progressively over the next quarter or two, we will see that completely come online.

I think from a length of stay and managing their own costs, we're helping them do that, both in terms of the 36% percent reduction in length of stay through RECELL, but also through the time to graft with Cohealyx. We're focused on a couple of hundred sites. And because of that, we have the very best sales force to do that, and they're very focused on the accounts that they're already in. And that's why even though it's a bit of a high touch, where they're in there, they're in there with procedures. They have the relationships while they're in there, they're selling to physicians. They're expanding broad and deep to different types of procedures, different size wounds, different physicians that haven't used it in the past. So we're selling within the relationships we already have and there's a level of trust that allows us to do that.

Again, Cohealyx and PermeaDerm, while we've launched them a year or so ago, they've been in that committee quite a bit, and we have champions that have put them there. And as they come out, those same champions they're going to make sure they're used and that we benefit from it as a company as well. And we're responsible in our cash management and our cost structure. We have reduced our costs in our spend in 2025 and we've done it in a very responsible, thoughtful way, strategic way because we realized that we also need to be positioned to grow. And so we feel really comfortable with where we're at and over the next couple of years as we grow, we don't feel like we're going to have to spend any more money to do that, and we'll be able to handle it. That's it. Thank you.

Great. Thank you, Cary. A handful of questions for you. The first, you recently preannounced financials and provided 2026 guidance, which you touched on very briefly. What underpins your confidence in from roughly $72 million in 2025 to $80 million to $85 million in 2026?

Yes. I mean I think just by way of background, I'm a commercial leader, right? So I mean I spent most of my career trying to understand and be predictable. And I think that this is a bottoms-up number. I mean I think as much as the company wants to show a certain amount of growth. This all comes from the field. It comes from each account, each territory, understanding which physicians are using it, which products they're using, how soon we think they'll adopt, what types of procedures we think they'll use it for at what cadence? When you have a renewable business, it's important to take into account when they start because if they start buying in October versus February, you're going to miss out on 6 months or so of revenue. And so I feel like it's very bottoms-up, very realistic, taking a lot of different things into account. Volume, time, how long they're in the VAC committee, how long it takes after it comes out of that committee to start using it, start buying it. I'm measuring utilization, and that will be a key factor and a precursor for revenue going forward.

So it gives me a lot of confidence having spent the last 3 months, having gone through at least partial fourth quarter, which we announced $17.6 million in revenue. I know where that $17.6 million came from. I could have told you before Thanksgiving, that's where we're ending up. And I don't think we could do that before. And I think we're getting very predictable in that way. I think that we've evened out. We understand how our customers use it, but we also understand how they buy. And the consistently -- consistency in the organic nature and the steady nature in which they buy helps us to understand our baseline predictability. And then obviously, we need to drive that number up.

Great. And I know you touched on that predictability right there at the end. Has there been anything that's changed in the business? Or what has changed in the business that gives you greater confidence in the predictability revenue today?

Yes. I mean I think getting really good at forecasting being predictable, building credibility, it's kind of people process and an overall understanding. So number one, it's the people trusting management. It's people forecasting telling you actually what they -- what's happening on the ground and then having a process. I mean we have a sales operations team that does modeling that where we're waiting certain numbers differently in month 1, month 2, month 3. And so I just think all of that is coming together, and we're becoming very predictable. I can probably tell you within a few hundred thousand what we're going to do in Q1 even, we're getting really good at it. And that's kind of step 1 because I think the company, it not only didn't perform as well as it could have in 2025, but the expectation is we're too high out of the gate. And actually, as the quarter went on or as the year went on, I think there was a feeling like we didn't know how we were going to end up or what was happening out there. And some of it was the clunkiness of the orders and the larger buys, and then some of it was just the unpredictability of reimbursement and other things. But we're going to get -- we are really good at that right now. And so now it's a matter of turning up the throttle and getting performance on track.

That's great to hear. Where are you most focused commercially in 2026 to drive that consistent execution and scale?

Yes. I mean I think focus is everything. I mean, yes, we're in these handful of countries. Yes, we're kind of pressure testing the economics, the distribution networks and so on. So yes, we're international, but we are not a company that says, don't look at our core business, look over what we're doing here or there. We are focused on the U.S. We are focused on our kind of existing 200 accounts. We're focused on our people, making sure they're properly incentivized but they have the right kind of quotas, the right comp plan, the right messaging, the right product line in their bag. And so it sounds really boring, but sometimes it is. Sometimes it's as simple as that. It's not easy, but it's simple. And that is -- we are about a focus. We are about execution about simplicity, about removing distraction and noise and letting our people sell great products to the customers they want to buy them.

Great. And switching gears a little bit. How should investors think about cash use as you move through 2026?

Yes. I mean I think we're going to be -- we're set for cash use. I mean, I think, obviously, as the revenue line grows, that helps us with cash. I think we have enough cash. We added some to the balance sheet. I think we're going to get closer and closer in the coming period of time. We're not kind of forecasting when we'll be profitable. But I think we're getting better and better at cash. We reduced cash burn last year in the latter quarters. So I think you'll continue to see us holding steady, really good cash management, really good thought around spend, around our investments. Like I said, we are positioned to grow. And so if you see our revenue line go up, you're not going to see the company having to spend millions and millions of more dollars to make that growth happen in '27 even. I think we're positioned for that, and you can see a really consistent cash management structure.

Great. Maybe just 1 more for me and then we'll open it up to the audience to see if anyone has any questions. But what are the key milestones investors should watch this year to gauge progress against your strategy?

Yes. I mean I think clinically, you're going to look at some of these clinical studies, some of the progress that we're making with key KOLs. You're going to see some of the data that comes out of it. So some of that is clinical. Some of that is the buzz that comes out in the marketplace. But ultimately, this is about revenue. But before you can get to revenue, it's about utilization. And so my KPIs will be all about utilization. Because that is a precursor to the revenue coming. So I'm tracking on a daily, weekly basis, who's using it, what new physicians have come on board for which products, what new types of procedures they're using it on kind of account by account, how we're growing within that account and within physicians and within procedures. And so it's that simple. I mean, I think there are a lot of things that have occurred in the past around -- from a regulatory reimbursement standpoint. But I think investors just need to look at revenue because I believe that -- the jury is out based on how the last year has gone as to whether or not this is flat or whether it's growing, and I think they should expect it to grow sequentially quarter-over-quarter and more than anything, that's going to be an indicator of the progress we're making.

Great. At this point, we'll open it up to the audience if there are any questions. Hearing none. Cary, thank you so much for the great presentation.

Thank you, Andrew.

And thank you all for joining us. Thanks, everyone.

Thank you.

Good morning, and thank you for joining this AVITA Medical quarterly Australian webinar. I'm Rudi Michelson of Monsoon Communications. AVITA Interim CEO, Cary Vance; and CFO, David O'Toole, are in Australia for a Melbourne, Sydney roadshow this week. And this webinar has been arranged, so everyone has the chance to be brief, direct and ask questions on AVITA's progress. Now let me point out that you can submit questions using the Q&A function, and we'll try to get to them after the presentation.

I'll now hand over to Cary Vance to begin the presentation.

Good morning, everyone. It's good to be with you and look forward to speaking with you today, and it's been a great week so far in Australia. And I'd like to reintroduce you to AVITA Medical. I've been the interim CEO for about 4 weeks. I've been on the Board of AVITA Medical for about 2.5 years. So I'm very familiar with the company, the technology, have always been excited and had a great amount of love for what the mission is of the company. And so over the past 4 weeks, I've dug in, and I'm really excited about what we're going to do going forward.

I want to remind everybody that the RECELL technology is clinically attractive to so many of our surgeons, and there are so many of them that want to implement it in their practice. And the data shows that it's extremely effective. The most recent data shows that not only is it clinically attractive for treating patients, but economically attractive for the hospital itself. Over the course of the coming months, we are focusing on the key institutions in the U.S., the high-volume institutions that can use RECELL and our other products. And with that level of focus and a renewed sense of execution and accountability in the company, I believe we can make the kind of progress that has been expected for a while.

We have two great new products in the past year that we've integrated into our portfolio. We believe that not only will those be substantial growth drivers in the quarters to come, but that they'll be synergistic in our goal to treat the patient and to provide clinicians with a full portfolio of products they can use to heal their patients. And finally, along with commercial execution, I believe that operational excellence is important, not only how we manufacture the product, but how we run the company, how we use investment and spend wisely over the course of the coming quarters so that, that investment has a return for the company and that the company grows to the level where we're able to provide a return on investment to our shareholders as well.

Just as a reminder, we are in the acute care space. And that is a space that is very unpredictable and oftentimes tragic. But what we offer at AVITA is predictability in that unpredictable world. Our technologies and their consistent ability to treat those wounds provide our clinicians and their patients with the very best source of treatment in those events. Again, as a reminder, our portfolio of products, PermeaDerm, Cohealyx and of course, RECELL, they treat across the continuum of care. They treat in a single hospital, single patient, single clinicians can use our products throughout the treatment of that wound. And in each case, we believe our products are best from a clinical perspective, but also that they speed up the time to graft, the time to heal, which is extremely important for the patient and potential complications, but also important for the hospital that is trying to -- that is striving to make economic progress themselves.

And so PermeaDerm is a biosynthetic dressing that protects the wound, that stabilizes the wound. And then depending on the wound size, and we're getting much more into trauma as well, there is a need for a scaffolding-type technology to build up the wound. And so we have this collagen-based dermal matrix that not only builds that up, but also helps in revascularizing and preparing the wound for graft.

And then, of course, our RECELL product. And the RECELL product is time tested in terms of its ability to be effective. And of course, over the last year, we've moved from a more manual process to a more automated process that helps facilitate healing and using the patient's own skin and a small part of that skin so that they don't have those harvested graft donor sites that are oftentimes painful and problematic. And then finally, again, PermeaDerm is a great source of protection and healing in that process.

What's important for this company is to get to a point of being data-driven. And so we'll do that in every aspect of the company. We already use data in effective ways as we manufacture, as we measure quality, as we forecast, and I'll talk more about that later. But it's important for us to provide physicians with the data they need to understand, but also justify utilizing our products.

And most of the data proves effectiveness, superior effectiveness of the products that we sell as well as the speed to healing. And time is of the essence for these patients. And so it's important that in the example of PermeaDerm that it promotes that wound healing quickly. And then RECELL, of course, not only does it take a much smaller amount of donor skin, but the data shows that patients can be -- can leave the hospital 36% sooner.

So for example, instead of 15.5 days, 10 days. And that amount of time not only aids the patient in terms of them wanting to get home, but in terms of the hospital and the amount of money that they spend on a patient in that bed, particularly in a critically -- critical care side of the hospital is extremely expensive. And as a result, they can save thousands of dollars -- tens of thousands of dollars on that patient if they leave earlier.

And then Cohealyx, of course, the time to graft. Other dermal matrices are oftentimes -- it takes a few weeks to be prepared for graft and ours can be ready with Cohealyx in as soon as a week. Again, this kind of shows you not only how the products are used in layering to heal the wound, but from a revenue standpoint, you can see that the additional -- these additions to our portfolio not only add clinical benefit to our clinicians, but they also add a revenue component kind of a per patient basis that utilizing 2 or 3 of the products on 1 patient can provide a significant improvement and increase in revenue per patient for AVITA.

This has been a challenging year and a challenging quarter, and we've made significant progress, just the same. I think we've had a lot of headwinds. We'll talk about those. One of those is on the reimbursement front.

The great thing about AVITA is that we got a reimbursement code. And that reimbursement code that pays institutions and physicians drives adoption. This is -- the economics of medical tech and biotech are significant and all the more going forward. And so anything that drives it forward, if it becomes unclear or diminished, it can stall things in its tracks.

And so the hope that we had at the beginning of the year that this economic component would propel our growth. And as a result, we predicted that there would be significant growth, that was stalled by the fact that the agency responsible for publishing the codes and paying the physicians failed to do so. So there's a lot of detail around this, but suffice it to say that they kicked the responsibility for that payment to 7 contractors that cover the entire U.S.

The U.S. is split up in 7 geographies. They all cover that. And then those contractors failed to do so. And once they fail to do so, the leadership of the company went to Washington, D.C., met with them, met with Congress people to admonish them that this is preventing physicians from using our technology and patients are going to suffer as a result that convinced them to move ahead and to do it, but they still took another 3 or 4 months. So just a few weeks ago, this was all kind of settled. Three of them have published, the other 4 have confirmed that they will publish most likely by the end of this month, for sure, by the end of the year. So it settled. But in essence, we've lost a year of momentum.

Now in settling it, they will go and do back payments for those physicians. So they'll be made a whole, but the company really lost that momentum with these physicians because there was a lack of clarity and really confusion about whether or not they would be paid. And so many of them shifted back to the old standard of care of grafting, even though it's a lower amount, they at least knew that they were going to get paid. And so that's the realities of the year. And one of the major headwinds that's caused us to look kind of flat in our growth, and we expect that as we've removed that barrier and that hurdle that it will actually become a propellant for us and a catalyst through 2026 and beyond.

A company like ours is all about focus. There are a lot of different things that we've had to do over the past couple of years to prepare for growth. And some of that can sometimes be a distraction. This reimbursement issue was a distraction aside from being a stalling event. We also have value analysis committees where Cohealyx, we're trying to push those through. So accounts -- hospitals have the ability to purchase the system, champions there that want to buy it need to wait until it exits the value analysis committee. We're in about 1/3 of our accounts. We expect some of those to come out in Q4, the rest in Q1 throughout Q1. And so we expect to be able to get a pretty good uptake in Cohealyx here in the next few months. But the idea is to focus on about 200 accounts, the burn centers, 120, 130 burn centers and the 50, 60 trauma center -- Level 1 trauma centers in the U.S., focus on those 3 technologies, each having its own value drivers as they work together and then focus on geographies.

Make no mistake, we are focused on the U.S. and focused on driving revenue growth in the U.S. And having spent a few days here in Australia with our distributor, I'm pretty bullish about what they're going to be able to do in the months ahead. And then we have a few other countries that we will have some progress, and we will be developing key opinion leaders and champions in those markets as well. There's a large market. I think one of the things that investors look at is what's the potential of the company, not just how well the products work, but how substantial is the market and the potential. And obviously, it's on me and on the company to realize that potential and be operationally excellent in the process. But there's a large -- there's 40,000 Americans hospitalized with burn injuries every year. And those burn injuries have a great degree of complications, potential for infection and sepsis and with a tremendous cost to the health care system. And so we address all of that. Any time that you're trying to change how they practice medicine, it's important to have a value driver in a clinical component, a workflow component and an economic component. And we tick all of those boxes for our customers. And our intention is to communicate that clearly, broadly and deeply through data and other influential means to expand adoption and utilization.

Again, this is all about focus. While the total addressable market is vast, it remains at $3.5 billion. It's important for us to focus with the resources that we have on the high-volume accounts, on those centers that do most of the work. And the great thing about it is that we are already active in those accounts. So we have a presence, we have a relationship. It's just that we need a lot of expansion.

For example, if you have 1 or 2 physicians using it, we need 10 or 12 using. If you have a physician using it on 1 or 2 procedures, we need them using it on a dozen different procedures. And so that's the goal of our commercial teams is to drive expansion and utilization within existing accounts to get further and further penetrated across our portfolio. Again, this is kind of what I talked about. We had talked about some of the opportunities we have for growth in the coming year. I think it's more than just removing the barriers that have been there, but we've restructured our sales team, which has probably caused a little disruption as well, but we've rightsized it.

So we've been able to remove representatives from more rural areas, calling on smaller accounts, and we have them located and situated throughout the country of the U.S. at the key centers. And then we also have the right kind of salespeople. I think that when customers were largely using ease of use, there was a lot of technique involved and there was a lot of need for our clinical tissue specialists to be in the cases to help them with technique to help train them to make sure they were using it properly.

Now that we have the more automated RECELL GO, we're able to have resources that both can help the clinician clinically, but also have that sales mentality and sales experience that helps drive further use and expansion in the hospital and have not only clinical discussions but workflow and financial discussions with business leaders and department directors in those hospitals. This is what I referred to in terms of the length of stay.

Again, this is not just the company promising and communicating that the RECELL technology is better for the hospital, but there's data that shows this. We already have one major institution in the U.S. that has adopted further use commitments around this data and that they want to realize this kind of savings and this kind of treatment for their patients as well.

Along the lines of data, obviously, we have the clinical data for Cohealyx and PermeaDerm needed for regulatory approval. But we've taken that next step to do post-market studies that provide our sales and marketing teams with the data they'll need to show effectiveness versus -- in the case of PermeaDerm versus cadaver skin or allograft. And in the case of Cohealyx show the data that shows the time to graft being sufficiently less than competition.

So we expect those clinical studies to be fully enrolled by the end of the year and that a lot of that data will be published throughout the year and towards the end of 2026. But because they're post-market studies, we are able to use cases and use some of that preliminary data on podium. We will be at significant burn conferences in January and in the spring, and we will have clinicians on podium talking about the initial readouts from those studies.

Again, I try to remind our teams, I try to remind myself why I joined the AVITA Board, why I'm proud and excited to be part of this organization. And aside from a lot of the business and commercial and economic commitments that I've made to make significant progress in the coming months and quarters. This is a big part of why I'm here. And this shows and demonstrates the power of the technology that we're trying to get to market. And this woman was treated conventionally, which did not work for her and then was treated with RECELL. And you can see the results after about a year, you can hardly tell that this tragic event happened to her.

And so this is part of the mission, part of why I, and I know a lot of the people that work at AVITA get up every morning because we know that every day our product is not in or fully in institution is another day that people are being -- are not able to be treated the very best way.

Moving on to financials. Just an overview, you're aware of the revenue miss in Q3. From a margin perspective, we stay strong in the 83%, 84% for RECELL. As we've discussed in the past, PermeaDerm and Cohealyx bring that margin down a bit when there's a mix. And yet those products, because of our limited amount of spend in those products, any revenue that we get drops down to the bottom line significantly and helps us with our gross profit along the way.

Operating expenses, as we've talked about, too, we've brought it down to a level that not only is sustainable, but is strategic. We cut expenses in the second quarter. As a result, our burn in the third quarter was $6 million as opposed to $10 million, and we expect to be able to continue that. And we also are positioned in terms of our people and structure to grow.

We have the fuel to grow. We also are set up to where we shouldn't have to make much change or additional spend beyond where we're at for the next at least year or 2, I think. From a cash perspective, we'll talk more about this. I'm sure there'll be Q&A about it, but we have been responsible in our cash use and our cash burn, and it's allowed us at the end of September here to have $23 million in cash.

And so we believe right now, we're well positioned for where we need to be, but we continue to address this and talk about this and to make sure that we strengthen this going forward, and that's our intention. If you look at the CAGR aside from, I think, a disappointing 2025 in terms of growth, if you look over the last handful of years, this represents during COVID, this is since FDA approval, all that has to go into going from FDA approval to launching, to scaling up, to securing reimbursement codes and having those make an impact in the market. There's been an average of about a 30% CAGR over that time. We expect that to get back on track after this year of learnings and headwinds and significant growth to follow.

Again, just in summary, I believe we're changing this health care paradigm in acute care. The way that you do that is to make sure that the hospitals have both an economic and clinical benefit aligned with using your products. We've done that. We will preach that in the coming months and quarters, but we will also use data to make sure that, that's justified. We will also use data internally to be disciplined from a financial perspective, but also be predictable to forecast accurately to set clear, transparent, relative and reasonable guidance and then achieve that guidance through day-to-day commercial execution and operational excellence, and that's our goal.

With that, I think we're handing it over for questions and Q&A.

Yes. Thank you, Cary. We'll now move on to investor questions. [Operator Instructions] I'll now hand over to Ben Atkins to run the Q&A.

Thanks, Rudy. Cary, investors are watching closely as you guide AVITA through this leadership transition. Question, as you step into this interim CEO role, what are your top 3 operational priorities over the coming months? And how should investors evaluate your progress during this transition period?

Well, as I've mentioned a few times, I mean, for me, it's about driving consistent utilization with our customers. If we drive consistent and expanded utilization with our customers, the revenue will follow. We will be able to predict it. We will be able to perform at rates that we haven't been able to in the past. So that level of commercial excellence.

Second, we need to maintain cost and operational management. There's a lot of back end to the company that supports the front end. And we need to maintain high levels of quality and high levels of strategic investment to get a return on that investment on the back end of the business. And then performance management and acceleration. We've hired a lot of people. We've changed the structure all the way up to the top and to the CEO and management -- executive management levels. I expect a high level of accountability, a high level of performance out of myself and everybody else. And there's structured ways of doing that, but there's cultural ways of doing that. My intention is to drive that to new levels in the year 2026 and beyond.

Following on from that, investors have also asked about how your -- the new leadership team plans to communicate and set expectations. To that end, what is your guidance philosophy? And how do you plan to communicate progress and expectations going forward?

Sure. So thank you. I believe in being as transparent as possible about everything that is a challenge and everything that is an opportunity and exciting to be very clear about what we're facing and what we're accomplishing. And before I can give guidance externally, I have to be honest with myself, and we have to be honest with our teams internally.

What are our issues? How can we overcome them? How can we mitigate risk? What do we expect to happen? How can we exceed what we expect to happen? So when we do that internally, it gives me the confidence to share it externally in a way that is very transparent and is very clear. And I don't think it should be a mystery what the company expects to do next year.

I don't think that if investors want to know what we're up against, what I expect that it should be pollyannish and hopeful. It should be based on information, on a customer-centric philosophy and company where the customers are telling us what they're going to do, and we're impacting that. So if they tell us what they expect to do, we should believe them.

And then we should do something to expand that and change that and share that with our investors externally. And yes, we'll do as a public company, we'll provide guidance. We'll give regular updates. But what's important for me is what we're doing internally so that when I tell you something externally, it's based in fact and in reality.

Moving to the products and particularly RECELL. Some questions are seeking clarity on how customers are engaging with RECELL GO. How would you perhaps characterize how the switch is going from the legacy RECELL to RECELL GO in those markets where it's available?

Sure. So there are some customers. These are some of our pioneering RECELL customers, which we value a great deal and appreciate. They develop techniques and capabilities using RECELL ease of use that are outstanding and amazing. And so they like how they do things. And so there's always going to be a limited number of accounts that -- and physicians that like the old manual technology because they know how to use it and they like how they use it.

And so we've looked into margins and our ability to manufacture both systems going forward, and there's no problem in doing that. And we want to be responsive to our customers, those that want to keep using the other. But the fact is everybody that's new, they're all going to use RECELL GO. They've all -- they're all looking to use RECELL GO. They're not going to dive into learning those kinds of manual techniques and taking that time.

And so everyone new is into RECELL GO and is transitioning over. I think we thought that it would be somewhat immediately -- immediate, everybody would switch over right away, but it's a transition, and we're going through that process but have had significant positive feedback from the field.

Some investors have asked also about how we are dealing -- company is dealing with reliability issues with the initial rollout of RECELL GO.

Yes. I mean, as with any technology, when you roll it out, you're going to have some opportunities for upgrades and fixes in the process. So there are a limited number of software-related error codes that were reported by some U.S. surgeons earlier in the year. There were no hardware issues, no safety issues that need to be reported or identified. So those software upgrades were rolled out last month in October at the sites.

And so in a way, it was a good opportunity for our technical people to get out into the field to do the upgrades, but also speak with customers about their experience with the product because, of course, we want to continue to have products and update them in ways that are helpful to the customer themselves. And so we're monitoring initial feedback. It's only been a couple of weeks. It's really too early to quantify how much of an impact there's been. But this is standard procedure in terms of software refinements, and we'll continue to do that.

RECELL continues to be a cornerstone of our success in burns. Investors are asking, however, to understand how growth could go beyond that core. To that end, how are we positioning RECELL for broader adoption in trauma and surgical wound settings? And when do we think that these newer indications could make a meaningful contribution to RECELL's growth?

I mean, obviously, we have history in these burn centers that goes back a long way and relationships there. And so I think when you're addressing trauma centers and new indications, it's a process. It is a process of educating the physicians about how they can use not only RECELL, but the combination of our products, Cohealyx and PermeaDerm in that process and then allowing the clinicians to give us the feedback we need but also develop their own synergies within the products, help us with champion those efforts to other physicians in the trauma space as well.

And so it's an evolution of, I think, education, but also working in conjunction with the physicians, sometimes companies at headquarters or in the R&D labs, they think this would be a good indication. This would be a good technique. And of course, we provide that for our physicians to help them. But we also listen to our advisory board, listen to those that are skilled and innovative in their space. We're not the only ones that are innovative at AVITA.

We have physicians and surgeons that are innovative. And if you give them certain tools, they will do more with it than maybe the company ever thought could be done. And so we educate them, they educate us, and I think that will help us propel our growth in the trauma space. And it will take some time over the course of 2026, I believe by the end of the year, we'll see significant uptake in trauma, and we'll learn a lot as well.

Turning to the international focus for RECELL. With CE Mark approval now secured for RECELL GO in Europe, can you walk us through the key milestones ahead for international expansion, including progress towards TGA certification here in Australia and how you see these markets contributing to the growth over the next year or 2?

Yes. I mean, on the one hand, I want to tell you how excited I am. I mean there are -- there's significant opportunity outside the U.S. I think, again, having spent some time with our distributor here in Australia and a physician as well here just yesterday, I think that there is a significant opportunity just like there is in Japan and in the U.K. and parts of the EU as well.

But I also want to make no mistake that investors and shareholders, I don't want you to think that, hey, don't pay attention to our progress or lack thereof in the past year and just pay attention to everything else we're doing in the world. The fact is we have a specific strategy and mission by country. They're all different. And ultimately, our goal is to make progress strategically and clinically and from a revenue perspective as well.

We're not expecting a lot internationally, whatever that means. I mean I just don't think people should think, well, we're going to make up for what we can't do in the U.S. by trying -- by selling a lot elsewhere. I think that anything that happens above and beyond our expectations internationally would be great.

But our goals internationally in most of these markets are introductory, building champions, understanding how good our distributors are and preparing ourselves for a more full-scale launch once we frankly get our act together in the U.S. from a revenue perspective and make the kind of progress that we expect.

Reimbursement clarity has been a key theme this year and a topic that you addressed in the slides. Building on that, with reimbursement clarity now improving, what early signs of renewed hospital engagement or physician/clinician engagement and procedural growth are we seeing in the U.S.?

Yes. That's a great question because I want to make sure that we're clear. And I think going forward, you asked about communication and transparency. I think it's really important to be clear about timing because timing -- if the timing is off, the result is the revenue is off, at least in people's minds and expectations. So when I say this has been cleared up, what has to happen and has happening and is happening is that we're communicating with those in the hospitals that are filing claims.

We're communicating with the physicians to say this has been cleared up, trying to get them to start using quicker, trying to get them to start ordering, trying to get them to file the claims so that they see that it's been paid, not that they don't believe us, we can prove it to them. But all of this is taking place, and it takes weeks, and it is taking weeks.

And so I don't expect anything substantial until it would be gradual in Q1. And what I will be looking at, and it's not just on this aspect, but in general, how do you make sure you hit your quarterly number and your yearly number as a result? You do that by looking monthly. You do that by looking daily. What are they ordering every day? What are they ordering every week, every month and who's ordering? And even before they order, who's using and how much are they using? And what are they using it for and how many physicians are using it?

I expect to get granular. I've run commercial teams. I have been a sales guy. And so I know that, that kind of granularity and information is available. It sometimes is a little bit difficult. It needs to be mined. It needs -- we need discipline around it. But when we start looking for early signs of uptick, sometimes it's as simple as if they're ordering this much pretty consistently, it goes up by 10%. It goes up by 20% on a daily basis because that's how you build a business, and that's how you build growth. It's not quarter after quarter. I mean, ultimately, it is. But that quarter is made up of months and weeks and days, and it's made up of customers and physicians and reps. And so bit by bit by bit, we're going to measure it. We're going to drive it, and it will all add up to the kind of growth that we expect.

Going a little deeper on to the reimbursement framework itself. You said that the MACs are now publishing their rates. Can you speak to the economics of these new Category 1 CPT codes for RECELL use and how that sort of links together with the broader reimbursement picture in the U.S. for RECELL?

Sure. So three of them have published. The others, like I said, intend to publish. And so in the U.S., the institution gets reimbursed, but then the physician also gets reimbursed. And the amount that the physician gets reimbursed is at a higher level than they would if they just did a split-thickness skin graft.

It's as simple as that. It's higher. So it's not an amount problem. It's in a surety that they will get paid. And so the economics are very clear, but they go both ways, obviously. So it's kind of sad that this thing that was supposed to make everything happen faster and propel this level of growth this year was the very thing that because they messed it up, physicians got confused and then they got gun-shy about using it, and they went to more sure way. And so now, I mean, you can imagine if some physicians who are fairly new, we're using -- we convinced them to use RECELL.

They started using it and then the financial piece became the way it became. So it's not just telling them, hey, you're getting paid now, go back to using it. They've been using the conventional way for now 10 months in the year. And so in some ways, it's also a reeducation around why they chose to use RECELL to begin with and having them get used to that in their standard of care.

And so in the U.S., money drives. I mean I'd like to think that -- and back when I first started in Medtech 30-some years ago, the clinician and what was best for the patient and what they wanted in terms of technology was what happened. They told the hospital to buy it and it was bought. But now it has to be justified economically even before they'll look at it clinically.

A lot of these hospitals won't let you talk to physicians until you've already run it through a pro forma for their hospital to make sure it makes economic sense for what you're charging them additionally that it can be justified from a reimbursement standpoint. So it drives the business, and it's going more and more in that direction over the coming years. So what's great about AVITA is that we have as strong or maybe even stronger of an economic story as we do a clinical story.

On that note, with the economic story, AVITA does have some of the strongest length of stay data you cited the more recent 36%. How can the company best leverage that going into the new year?

Yes. So what's important when you're dealing with a hospital is to make sure that the different parts of the hospital or a hospital system are talking to one another. So this length of stay piece and the economics associated with it, and it's not just economics, it's also optics. If you think about a CFO and a CEO of a hospital, the CEO cares about infection rates, complication rates, readmittance rates. Those things are published now. It's not just something that is bad for the patient or that the hospital encourages. In the U.S., a lot of those rates are now published. So if you're a patient or you're somebody that's public information, you can look and see in a particular city or across the country who has the highest infection rates from the hospital. So that's something that they don't want. They don't want to be on that list.

And the CEO cares about those kinds of optics. But the CFO cares about the overall cost and profitability of the institution. And so he or she is the one that can see, well, listen, we're spending a little bit more for the technology, but what's the reimbursement, but also can we save money? And how much -- how many dollars are associated with clearing out an ICU bed or a bed in the hospital. And so what's important for our sales team to be able to do is to talk to the physician to be in the cases, but then to walk down to the carpeted areas of the hospital and have these discussions with the financial people and help them understand and then help the different parts of the hospital talk to each other so that they're all on the same page. And so we share that data with them. We get them to talk to one another and be unified in what's best for the hospital, and that is utilizing our product.

A little bit deep on to the commercial execution. Some are interested in understanding how we're positioned in the U.S. market. To that end, can you characterize the sort of the size and setup of our field force, our salespeople? And under what sort of structure and process do we, AVITA sell ourselves to these 200 hospitals centers that we talk about in the TAM?

Yes. I mean we're like a lot of companies, a lot of companies I've run that have sales reps, that have sales managers, that have people that the sales managers report to and then a commercial leader and then me. And we have a very free flowing organization in terms of those levels I just described. We don't have barriers. We have a lot of engagement and involvement all the way up to the CEO role. Obviously, the reps call on the customers. They're the ones charged with driving utilization and expansion within the account.

They have those conversations that I described. Their performance is managed, their predictability and forecasting is managed by their managers. They have strategic support in those high-level conversations and understanding how to approach and do messaging. We also have a strategic account manager who will go into the high-level hospital systems and have those discussions how enterprise-wide they benefit financially and clinically from adopting our technology.

And so it's very efficient and very effective. As I described before, we have the -- to me, we have the exact right number of people. They're structured the exact right way. And I would also say that we have the highest quality sales organization we've ever had because when you trim down the sales force and you do some shifting around, you take the opportunity to keep your best and brightest, and that's what we've been able to do. And so going into 2026, I feel really confident and excited about the team that we have commercially.

Well, finally then, as we do enter this next transition phase, this next stage, what key proof points will rebuild investor confidence in your mind and define the company's next stage of value creation?

Yes. I mean when you're the CEO of the company, you're looking at dashboard literally or in your mind of these are the catalysts. These are the drivers. This is the indication that I feel like we're making an impact and like that we've turned the corner and so on. But ultimately, for shareholders, they're not going to see the daily sales. They're not going to see that kind of a micro side of things. But if I -- if you're just going to look at one thing, look at revenue, I know what's behind the revenue. Utilization is behind the revenue and a lot of other efforts and a lot of other metrics that we're going to drive.

The other thing I'll say is that in the past quarters, there's been some lumpiness and chunkiness to the orders, some larger orders coming. I think that we have learned some things about how our customers order, how we sell and present to them. I think that the -- there's a more organic -- not just this fourth quarter, but going forward, there's a more organic aspect to the orders. So I think it will be easy to see that in a given quarter, as the trajectory goes up that it's, I don't want to say, legitimate, but that it's consistent, I guess, and that you can count on that being an indication of what the next quarter should be.

And I think in the past, if we've had -- case in point, if you go back to Q3 of 2024, which was a comparator to this past Q3, which was disappointing, the Q3 of 2024 was 19, and yet there were some larger orders in there that were associated with, I think, some customers buying ease-of-use because they thought that perhaps it would be going away, as we transition to RECELL GO, things like that.

And so I think that going forward, if you're looking at revenue, let's say, of Q1, and it's at a certain level, I think you can expect that, that's the beginning of what will happen in Q2. And that's not just good for you to look at, but that's what I'll be looking at. So what I'm looking at should be the same thing you're looking at and vice versa. There shouldn't be any distance between what you're seeing and what I'm seeing, and so that's what I expect to happen in the coming quarters.

Thank you, Cary. And with that, let me hand you back to you for closing remarks.

Sure. I do see a raised hand here. So I'm not -- I want to make sure I'm addressing any other question. Am I able to see this?

Any questions just directed to the Q&A function.

Well, I don't know here, somebody's got their hand raise. I don't want to have a question left unanswered. So...

Okay. Let me -- so a question of clarification. In Slide 12, you talked about 3 boxes. Are those all active events or future goals? I believe these boxes carry out the 3 strengths that are current to our 200 focused accounts in the slide presentation.

Okay. We're doing on Slide 12. I'm not sure 3 boxes. Are these the 3 boxes? Yes, Slide 12, here we go. Yes, these are currently going on. As I indicated, we are currently active in 90% of those centers, which is great because there's a lot that is associated with just introducing yourself as a representative of the company, the company itself, the products going through validation in those hospitals, getting access to the hospitals.

We're in them. So we have the relationships. We just need to drive expansion of those relationships as the second box that we do have about 1/3 of those centers currently have Cohealyx in their value analysis committee. We expect some of those, probably somewhat of a small amount to come out here in Q4 and the rest gradually throughout Q1 and even into Q2, and it will basically give us a license to sell in those hospitals. And then yes, I mean I talked about sustained and supportive case execution, our reps in the cases, trying to drive more cases, more physicians to utilize it, yes. So...

I'm sorry, Ben, but do we want to address any of these others that are in the chat?

We are up against a time constraint. So perhaps if you want to say a few closing remarks, we'll happily take some -- a couple of these questions offline just for clarity sake.

Sure. Yes. I mean I'll just -- this one about U.S. revenue, depending on U.S. government reimbursement. We have about 70-some percent of the cases we do are under Medicare and Medicaid, and so it's about 70%. And then I think we talked about how we sell the structure and the process, how we sell in the hospitals, in the European markets, I think I talked about that.

We are early days with new distributors being set up with champions. We did a case in Germany, which is exciting. We have a physician there that's a champion. Again, it's early days. We're going to learn some things and do some things that are going to help us in forward quarters and years really. So I think that's all I see.

There was one more to that end, are there any reimbursement issues with Cohealyx and PermeaDerm? Or were those problems related only to RECELL?

No. We don't expect those. Those are currently covered, and we haven't run into any of that.

And then there was one question from David Williams. I'm not sure if maybe that David, a little bit more clarity, but are the charges in CMS outpatient rates relevant to you? And if so, are you prepared? Not sure if I know the context of that.

Can you read it one more time, please?

Are the charges in CMS outpatient rates relevant to you? And if so, are you prepared?

Okay. I'm not sure I quite understand it, though.

David, if you're listening, we will have to follow up with that question.

Let's do that.

And I think with that, we've gone through the list.

Okay. Well, perfect. So I think a bit ago, you returned it to me for summary. So I'll do that. I think at the risk of repeating myself and the reason why I think it bears repeating is because this is going to be a very focused organization. It's what I do and what I've done in the past and what I intend to do going forward.

I expect and plan and have already started to build a culture of accountability to drive consistent utilization, expanded utilization and predictable utilization in these accounts. And as it's predictable and as it's high performing, then I'm going to be able to be more predictable, I think, in my guidance and in my communication with in a very, I think, reasonable but exciting way going forward.

I expect to have with David's help, but also with the help of our teams and our company we have a culture of not only productivity, but a culture of operational excellence and a lot of pride in what we do and our mission from a clinical and patient perspective. And people are what drive the growth of every organization.

I can probably talk about it the least on these kinds of calls and any other business discussion. But the fact is every one of those employees that we have are going to be the best they can be. We're going to hire the best. We're going to expect the best from them, and they're going to do some really great work going forward and we're all going to benefit from it as well as the clinicians and the patients they serve.

So thank you all for your attention and your engagement, for your support and for your investment. Our expectation is to continue to work really hard to earn your trust and to keep your trust going forward.

Good day, and thank you for standing by. Welcome to the AVITA Medical, Inc. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Ben Atkins. Please go ahead.

Thank you, operator. Welcome to AVITA Medical's Third Quarter 2025 Earnings Call. Joining me on today's call are Cary Vance, Interim Chief Executive Officer; and David O'Toole, Chief Financial Officer. Today's earnings release and presentation are available on our website at www.avitamedical.com under the Investor Relations section.

Before we begin, I would like to remind you that this call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results to differ materially from any expectations expressed or implied by the forward-looking statements. Please review our most recent filings with the SEC for comprehensive descriptions of the risk factors. Any forward-looking statements provided during this call are based on management's expectations as of today.

I will now turn the call over to Cary.

Good afternoon in the U.S., and good morning in Australia. It's great to be with you today. As this is my first earnings call as Interim CEO, I want to begin by saying how much I appreciate the opportunity to speak directly with our investors, employees and clinical partners who make AVITA's mission to transform acute wound care possible. I've been with AVITA as a Board member for the past 2.5 years. And now, stepping into the Interim CEO role, I see the company with new eyes, but also with deep conviction. AVITA's purpose is meaningful, its people are talented and its products are transformative. My job and our collective focus is to turn that potential into consistent performance where mission, execution and shareholder value align.

Let's be clear, this has been a challenging quarter. We reported approximately $17 million in revenue, below expectations and reflecting the ongoing impact of reimbursement disruption that began earlier in the year. We now expect full year revenue in the range of $70 million to $74 million, down from our prior guidance of $76 million to $81 million. As a reminder, in January, new Category I CPT codes for the use of RECELL took effect. Because CMS did not assign national clinical payment rates for these codes, responsibility for establishing payments fell to the regional Medicare Administrative Contractors, or MACs. The time required for each MAC to set rates and begin adjudicating claims created uncertainty, and providers awaited confirmation of reimbursement for RECELL procedures. As a result, many providers were unsure when or how claims for RECELL procedures would be paid.

The good news is that significant progress has been made. As of today, all 7 MACs have now published or confirmed acceptance of provider reimbursement rates, providing clinicians with clarity and confidence of payment when using RECELL. We're already seeing early signs of renewed demand, and we expect utilization to normalize progressively through the coming quarters. With provider reimbursement now largely resolved, RECELL's value is increasingly recognized across data, adoption, payment and policy.

At the foundation, there is powerful real-world evidence, clinical and economic data showing the ability of RECELL to optimize healing, reduce donor-site burden and shorten hospital stays. Inclusion of the CPT codes for the RECELL procedure within the CMS payment system establishes a clear pathway for clinician reimbursement. Predictable reimbursement now restores clinicians' confidence in payment. Together, these layers help fuel adoption as clinicians and hospitals integrate RECELL into routine practice.

For example, building on the strong clinical evidence, including data showing 36% reduction in hospital length of stay, one of the nation's leading burn centers has now incorporated RECELL into its treatment protocol for burns under 20% total body surface area. This is a clear example of how strong data, clinical experience and reimbursement clarity come together to make RECELL a standard point of care. I can also share that since RECELL GO received CE Mark approval in Europe in September, we saw the first patient outside of the U.S. treated with the device in Germany just last week. It's an important milestone that broadens access to our RECELL technology and underscores its global relevance.

While this quarter reflected the impact of reimbursement timing, it was also shaped by the pace of hospital Value Analysis Committee, or VAC, reviews and the evolution of our commercial organization. These factors collectively limited our near-term results and not the strength of our strategy or the quality of our products. In my first few weeks, I've spent time listening to our teams, to clinicians, our hospital partners and to shareholders. Their feedback has been candid and consistent. Our products are exceptional, but our performance hasn't always matched their potential. RECELL, Cohealyx and PermeaDerm make a real difference in acute wound care. And now, it's on us to ensure hospitals can put these products into the hands of their clinicians, and most importantly, on to their patients.

That's where my focus is, turning potential into consistent, reliable performance. Under my leadership, we've moved quickly to refine our commercial organization, aligning structure, territories and accountability around our highest value accounts. These adjustments are improving focus, visibility of customer behavior and the coordination between our sales and clinical teams. To that end, we've taken a fresh look at our market opportunity to better align our go-to-market strategy with observed customer behavior.

Historically, we've shared that across all U.S. burn and trauma hospitals, the total addressable market, or TAM, for AVITA's portfolio is about $3.5 billion, and that long-term opportunity remains unchanged. What has evolved is our understanding of where meaningful scalable use occurs. Roughly 90% of our revenue today comes from about 200 burn centers and trauma hospitals, core institutions that define acute wound care in the U.S. These represent our most immediate and scalable growth potential.

You'll see in the slide that this focus segment represents $1.3 billion in targeted opportunity within a broader $3.5 billion U.S. market. We're currently serving about 5% of that segment, giving us significant runway for penetration and growth. In other words, this focus allows us to prioritize the hospitals and surgeons where our relationships are strongest and where we know adoption, utilization and cost portfolio expansion can be scaled most effectively.

With this focus established, our execution priorities for the fourth quarter are clear. First, rebuild order momentum. With reimbursement clarity for use of RECELL returned, our commercial organization has a focused plan to reengage accounts that lowered their use of RECELL. This is back to basics execution, targeted outreach, disciplined follow-up and strong field accountability to deliver steady volume recovery.

Second, drive consistent utilization of our products. Our sales and commercial teams are working side-by-side to increase case frequency and ensure that our products, RECELL, Cohealyx and PermeaDerm, become part of a routine clinical practice. Consistency and utilization creates internal champions, champions who help expand adoption.

Third, complete the transition of our commercial organization and enhance forecast accuracy. With the commercial structure now in place, our focus is on ensuring accountability and giving our teams the tools to succeed. We're taking deliberate steps to drive more consistent and predictable revenue growth, grounded in a clear understanding of customer behavior. This includes moving towards more organic monthly purchasing patterns and refreshing our forecasting model to provide a more accurate view of future revenue. These priorities are about near-term execution, while serving the longer-term strategic vision that defines who we are and how we win. Consistent utilization is our foundation. Predictable use of our products drives predictable demand. Portfolio depth is our differentiator. RECELL, Cohealyx and PermeaDerm, used together, cover the full acute wound healing continuum.

Patient impact remains our purpose. Every decision should ultimately improve outcomes for patients, clinicians and the hospitals that care for them. We've already talked about RECELL, the anchor of our portfolio and our foundation for growth. Let me turn now to our complementary products, Cohealyx and PermeaDerm, both of which extend our reach across the acute wound healing continuum.

Cohealyx continues to emerge as a complementary growth driver. VAC submissions are underway in roughly 1/3 of our target accounts. As hospitals complete their reviews, we expect ordering to begin and build steadily over the coming quarters. Clinical feedback from our Cohealyx I study remains positive and consistent with our expectations, with surgeons noting rapid readiness for grafting. We expect full enrollment by year-end and anticipate results early next year. PermeaDerm also continues to perform well as a versatile biosynthetic dressing that complements both RECELL and Cohealyx across the wound healing continuum. We're encouraged by the early results from our PermeaDerm-I study, and we expect full data next year.

Financial discipline remains a further top priority. As David will explain in more detail, we've taken clear steps to improve the efficiency of our operations. Our operating structure is leaner, our cost base is lower, and our teams are focused on doing more with less, all while maintaining the investments that drive growth. On the balance sheet front, we secured a waiver of our Q3 revenue covenant under our OrbiMed credit agreement and have agreed to an amendment lowering the revenue covenant for Q4.

Looking ahead, we're maintaining balance sheet flexibility to ensure we have the capital resources to support our operations and growth plans. We'll provide an update on financial outlook, including 2026 revenue and guidance, in early Q1, ensuring that our guidance reflects both operational progress and our capital strategy. In the meantime, we are conserving cash and maintaining disciplined cost control, while continuing to support our operations.

While Q3 marked a transition for AVITA, it also signals the beginning of a more focused, disciplined and accountable phase for the company. The fundamentals are in place: reimbursement stability; clinical validation; and a first-rate portfolio, RECELL, Cohealyx and PermeaDerm, that allows us to serve every stage of the acute wound care continuum. We are focused on execution, delivering consistent performance, restoring confidence in fulfilling our mission to transform acute wound care for patients, providers and health systems. I look forward to continued engagement with our shareholders and to sharing measurable progress in the quarters ahead.

With that, I'll now turn the call over to David.

Thank you, Cary, and good afternoon, everyone. As Cary described, the third quarter was an inflection point for AVITA, one that reflected the challenges we faced this year, but also the actions now underway to set the stage for improvement. The results were disappointing, but maybe not surprising, given the timing of reimbursement resolution, the pace of hospital VAC reviews and the transition of our commercial organization. With those factors now stabilizing and our cost discipline firmly in place, we entered the fourth quarter better positioned to begin an upward trajectory, measured, deliberate and grounded in execution.

I'll now walk through our financial results for the third quarter ended September 30, 2025 and provide additional context around our cost structure, liquidity position and financial priorities as we look ahead to the fourth quarter and beyond.

Turning to the first slide. It shows a summary of our key financial metrics for the quarter, revenue, gross margin, operating expenses and net loss, which together reflect both the impact on revenue caused by dampened demand due to reimbursement uncertainty, but also shows the benefit of disciplined cost management, which we can control.

For the third quarter, commercial revenue was $17.1 million compared to $19.5 million in the same period last year, a 13% year-over-year decline. This performance primarily reflected the temporary reimbursement headwinds, along with other factors, including the timing of hospital VAC reviews. However, for the fourth quarter, now that all 7 regional MACs have published or confirmed provider reimbursement rates, this peels away a barrier to provider use of RECELL and support the return to growth in RECELL revenue. As a result of the third quarter revenue, we are revising our full year 2025 revenue outlook to a range of $70 million to $74 million compared with our prior guidance of $76 million to $81 million. This adjustment reflects the slower-than-anticipated timing of reimbursement normalization, as well as our measured expectations for RECELL demand returning and utilization through year-end.

Gross profit margin for the quarter was 81.3% compared to 83.7% in Q3 2024. The decline was driven by product mix, consistent with the increasing contribution of Cohealyx and PermeaDerm to overall revenue and other inventory-related adjustments. When isolating the RECELL franchise, gross margin remained strong at 83.6%, which we expect to sustain going forward. As a reminder, our average sales price share for Cohealyx and PermeaDerm is 50% and 60%, respectively. While these profit-sharing arrangements reduce overall reported gross margin as a percentage, they contribute incremental gross profit. And due to limited additional SG&A expenses associated with this revenue, operating profit is strengthened, along with operating cash flow.

Total operating expenses were $23 million, down from $30.2 million in Q3 2024, a reduction of $7.2 million or 24% year-over-year. This improvement reflects the impact of our cost reduction initiatives and the ongoing transformation of our commercial and administrative infrastructure. Breaking that down, sales and marketing expenses decreased by $3.1 million, driven by lower salaries, benefits, stock-based compensation and commissions. General and administrative expenses declined by $2.4 million, reflecting reduced headcount and compensation-related costs. Research and development expenses were down $1.7 million, primarily due to lower personnel costs and the capitalization of certain project expenses, specifically in-house developed software. As previously disclosed, following the commercial field transformation in Q2, we reduced operating expenses $2.5 million per quarter, or $10 million annually. Actual results for the third quarter show that reduction, which will continue for future quarters.

Operating loss for the quarter improved by 34% year-over-year, decreasing to $9.2 million from $13.8 million in the prior year period. Other expense net totaled $2.8 million compared to $1.1 million in Q3 2024. The increase primarily reflects a noncash charge of $2.2 million related to the issuance of 400,000 shares of common stock to OrbiMed as part of the August amendment to our loan facility and a $0.9 million change in the fair value of the debt. These items were partially offset by $0.3 million in investment income.

Net loss for the quarter was $13.2 million or $0.46 per basic and diluted shares compared to $16.2 million or $0.62 per basic and diluted share in Q3 2024, an improvement of approximately 19% year-over-year.

Turning to our cash position. The next slide shows the quarterly cash waterfall that illustrates our continued progress in managing our cash. We began the quarter with $15.7 million in cash, cash equivalents and marketable securities. In August, we strengthened our balance sheet through a $13.8 million private placement net of expenses. From there, the waterfall chart shows operating cash use totaled $6.2 million in the third quarter, a significant improvement compared with $10.1 million used in Q2, representing nearly a 40% reduction quarter-over-quarter. We ended September with $23.3 million in cash, cash equivalents and marketable securities. This trend reflects the tangible benefits of our cost actions and tighter cash management that we can control, while we return to accelerated revenue growth in future quarters. With our cost structure firmly in place, as revenue grows in 2026, we will methodically move towards cash flow breakeven.

Turning to our debt facility with OrbiMed. As of September 30, we secured a waiver for our third quarter revenue covenant under the OrbiMed facility at no cost. In November, we entered into a sixth amendment to the agreement, which lowered the fourth quarter revenue covenant to $70 million. Further amendment of the 2026 revenue covenant, if necessary, will be addressed once we have established revenue guidance for 2026. We are also evaluating capital funding options to ensure AVITA has sufficient resources to support operations through cash flow breakeven. We expect to provide an update on our capital plans together with 2026 financial guidance in early Q1 of 2026.

Looking ahead, our financial priorities are clear: first, support revenue recovery as clarity around provider reimbursement stabilizes physician use of RECELL; second, establish a more targeted approach to our large market opportunity to ensure every dollar spent advances putting products into the hands of clinicians and on to patients; third, sustain our disciplined use of cash to support the pathway towards cash flow breakeven.

Lastly, with our significantly leaner cost base and stronger visibility into utilization behavior and better forecasting, we are entering a more focused and accountable phase for the company and towards financial sustainability through execution on both growth and efficiency. We remain committed to transparency and execution as we close the year and prepare to share updated financial guidance in early Q1.

With that, I'll turn back to Cary.

Thanks, David. To close, while we adjusted our revenue forecast for 2025, the actions we're taking now are setting the stage for a stronger 2026. AVITA has always had the right clinical science, technology and products. What's changing now is how we operate. We've engaged accounts as reimbursement clarity returns, reset our commercial focus and are establishing the structure and accountability needed to deliver consistent performance. I'm proud of the team's resilience and focus and confident that we're setting the right conditions for renewed and sustainable growth.

With that, let's open the line for your questions.

[Operator Instructions] Our first question will come from Ross Osborn of Cantor Fitzgerald.

So maybe starting off, can you spend a little bit more time on the initiatives you guys are taking to better be able to forecast the business? Just curious how you're thinking about that as we're getting close to 2026.

Sure. I mean, good to hear from you, Ross. It gets all the way down to the rep level, to the customer level and understanding how our customers are utilizing the products and then, in turn, how they intend to purchase the products and what kind of cadence that is. And then, we have really good modeling in our sales support structure and really feeling like that's going to even out from month-to-month and quarter-to-quarter now that we've had a number of months under our belt with some of these newer products and newer customers. And so, between the processes and the people that are involved in it and the leadership that is now in place, I think we're going to improve quite a bit.

Okay. Great. Glad to hear it. And then, nice to see the European approval and realize you're targeting select geographies at this point. But how should we be thinking about your need to balance resources as far as launching in a new market, especially one as fragmented as Europe versus kind of getting the U.S. business back and steady?

Yes. I mean, our primary focus is the U.S. We're laser-focused on the U.S. We're going to be putting in place limited resources, selecting distributors in selected markets, as you said, really trying to understand customers in the market there and getting traction, getting acceptance and clinical champions in those markets. And so, while we're committed to them, we understand that our focus and our growth is going to come in the U.S. for a good long time. We have to get better at what we do in the U.S. I don't believe we're going to be bifurcated or distracted at all by what we're doing in other countries outside the U.S. And so, it's not a balance. It's a focus on the U.S., but with clear intention in these other countries.

And our next question will be coming from Josh Jennings of TD Cowen.

I was hoping to just -- it's still early days with the normalization of reimbursement and issuing finalized pricing under these new CPT codes. How -- there's probably a wide range of responses from accounts. But how are you guys thinking about the recovery, our accounts, with I guess written policies in place, are going to have confidence in reimbursement [ going forward ]? I'm sure some may want to try and make sure they get reimbursement. But should we be thinking that early 2026, we're going to be back to baseline in terms of having a [ resale ] customer base have confidence that reimbursement will come through?

Sure. Good to talk to you, Josh. This is about just educating them with the codes and having them start using the product and see that they have that reimbursement and showing and proving to them that it's in place. I think that we've been trying in parallel -- as we've been waiting for the MACs to approve and publish, in parallel, we've been setting up our accounts so that there's not too much time between when they publish and when they feel confident. But yet, there is going to be a bit of a lag. And so, we're in earnest trying to get them up to speed so that not only the physicians, but those that are filing the claims are aware of what they need to do and feel confident about it.

Josh, this is David. Just to add on one thing on that, and that is, as we talked about, these claims go all the way back to January. And so, these -- the MACs are going to adjudicate all of those claims going back to January that are still outstanding. And so, that will also lead to physician confidence when they realize that they're going to get paid for those claims that they've already filed going all the way back to January.

That's helpful. And just any update just on VAC approvals for Cohealyx and how they're trending? And any help just thinking about how many accounts may have the green light for Cohealyx utilization at the start of '26?

Yes. I mean, we have about 1/3 of our accounts that have -- that are in the VAC, and about 2/3 of those are scheduled to come out of the VAC in the fourth quarter, but we all know it doesn't always happen on time. So let's say, a fraction of that happens. And then, the idea is how do we truncate the number of days between when it's approved and when they order, and then when they order and when they use it and how much they use it. And so, our teams in the field are busy preparing for that VAC approval, and so that there are no gaps between that process and the ordering and utilization process.

Understood. Just one more. Just are there accounts where RECELL, Cohealyx and PermeaDerm are all available through VACs if needed? And are you seeing any signals in those accounts around the sales synergies and just the utilization of all 3 in specific cases has given you guys confidence that this portfolio can ramp once the RECELL reimbursement turbulence is now -- you guys are making your way through the eye of the storm or out of the eye of the storm and VAC approvals are coming for 2026? I'd love to just hear are there any signals from accounts where they have all 3 products in hand and are utilizing them?

Yes. Josh, thanks for the question. This is David again. So as you know, RECELL is already through VAC in the majority of the accounts that we're already serving. There are a few that we still are going through some of the trauma centers. But for the most part, RECELL is already approved. So what we're looking for is those VACs for PermeaDerm and for Cohealyx. And at this point in time, we do have accounts that are approved for all 3 of those, and they are using them on wounds. Now, it's still early days, and we will be able to provide more information on that. I think it's a good KPI at some point to share with all of our investors and our analysts. But at this point in time, it's a little too early to say what momentum we're getting from those hospitals that have all 3 approved.

Makes sense. We'll wait for some updates on the next earnings call.

[Operator Instructions] Our next question will be coming from Ryan Zimmerman of BTIG.

This is Sam on for Ryan. Maybe I can start about how you're thinking about the spending outlook, given where the balance sheet sits today and cash profile. I guess, is there more that needs to be done to right-size the organization going forward? Or are you pleased with how the teams are set up today?

Yes, we would -- thanks for the question, Sam. It's David O'Toole. So I had a few comments in my prepared remarks. And we're at a place now where we believe our G&A and our sales team is at a level where we can maintain it. We don't think there are any more additional reductions in expenses that need to happen. And we're comfortable with -- as shown, that our cash use is declining because of the restructuring that we did in the second quarter, going from $10 million use of cash down to $6 million. We want to continue that trend. But we're not going to do it. We can't cut our way through to profitability. You just can't do that. You know that. But what we are at is a place where our expense structure is very disciplined, very solid. And now, it's in a place where we can have that expense structure so that when our revenue increases, it will continue to get us on a path to profitability and cash flow breakeven.

Our next question will be coming from Chris Kallos of MST Access.

Just staying with the sales team, David or Cary, I know that was a big focus early this year in terms of reconfiguring how those -- that team is being incentivized. Are you thinking about changing the incentive structure for what you have in place or moving towards more of a portfolio sales approach rather than medical detailing?

Well, I've been in the role a few weeks. I'm going to put a lot of sales compensation plans together. I think for us, we're going to want to make sure that it's aligned with what we're trying to accomplish. I think beyond that, as we're in the process of looking at 2026 compensation plans, I do think that it will be simple and fair and directed towards growth. And that's probably all I can tell you right now, but it's definitely going to be aligned with what we're trying to accomplish in the field.

Yes. I guess that's probably unfair at this stage to ask those questions. Maybe a question for David. With the current guidance such as it is, does that factor in any catch-up from the backlog of reimbursement payments?

Chris, good to talk with you, and thanks for the questions. I really appreciate it. Look forward to seeing you down in Australia next week, as always. But from -- this is not going to be a light switch that comes on with the MACs now publishing and having the prices out there. It's going to take a little bit of time. We are out there educating our clients, our customers that it has happened and that they will get paid. But it's -- we have to rebuild the confidence of those providers to use RECELL and to know that they're going to get paid. So the guidance for the rest of this year is really a result of the lower revenue from the Q3 and really from the lower revenue from January of this year, caused by the reimbursement headwinds. As we said in our prepared remarks, we're going to give a complete update of our revenue guidance for 2026 in early 2026. And so, we'll have a -- everyone will have a better picture of what 2026 looks like at that point.

Great. And David, is it too early to talk about breakeven targets?

Yes, it is at this point. Cary has been on the job for 3 or 4 weeks now. We're all just kind of resetting. And we will be able to give more color around that and all of the revenue guidance for 2026 at the early part of the year.

And I'm showing no further questions. I would now like to turn the conference back to Cary for closing remarks.

Thank you, operator, and my thanks to all of you for your questions, your engagement and support. I think we've used the word headwinds quite a bit, both in our remarks and in some of these responses. I think what's interesting about the company is that the very same things that have been headwinds are going to be tailwinds and are going to propel us going forward. I think sometimes, the company has issues like recalls and other things that are just stopping them in their tracks. I think in this case, if you take a look at VAC committees that have held us up a bit, those same approvals are going to propel us forward. The same thing occurs with reimbursement uncertainty. When there is certainty, it will propel us forward. The same thing happens with the commercial organization. When you optimize that, that does propel you forward when you get data that tells you that you're saving money and making money by using and purchasing our products. Those types of things propel you forward financially and clinically. There's really strong evidence that AVITA and our products are going to make a growth move in 2026. And so with that, I look forward to discussing that further progress in the weeks and months ahead with all of you. Thank you.

Thank you. And this concludes today's conference. Thank you for participating. You may now disconnect.

Okay. Thank you, everybody, for joining us. This is Morgan Stanley's 23rd Global Healthcare Conference, and we're excited to bring interesting stories to you all.

Before we get started today, there's going to be an important disclosure available on our research website. So if you go to www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to a Morgan Stanley representative. And with that out of our way, I'd like to turn it over to Jim to first introduce yourself and then let's start talking about AVITA, which is a very exciting and interesting company that I've had the pleasure of getting to know over the last few years. And this conversation will help, I think, level set the story where you are today and where you guys are headed.

Perfect. My name is Jim Corbett, and I'm CEO of AVITA Medical. We have a really exciting therapeutic acute wound care portfolio, which is headlined by a technology called RECELL, which I'm sure we'll talk about here in a moment.

Awesome. So maybe just to dive in, can you tell us how -- what is the RECELL platform itself? And how does that fit into the overall mission of AVITA?

Well, RECELL is really unique. And in a way, I'm going to describe it at the end. What it produces is a spray on skin graft. And when you think about that conceptually, it's like how does that happen? Well, what we do is we take a very small autologous from the patient biopsy, and we disaggregate it in an enzyme buffering solution and then deliver it as a spray onto the wound.

Now these are for partial and full thickness wounds that often are 10, 20, 30 and more total body surface area. The benefits of the spray on skin are multiple. So first and foremost, it's a reduction in skin necessary to do the graft in the order of 97% less skin. So the biopsy you take for RECELL will expand 80:1 and to give you a dimension of it. So a 2x 2 square centimeters could cover the area of your back -- of your body. And for someone who says, how big is 10%, it's like your whole arm, right, as an example. So it's really quite extraordinary. And the second benefit is it heals very quickly because what you're doing is you're spraying the cells into the wound, they adhere to the revascularized wound and they proliferate and they proliferate faster, leave less scarring and that has a tremendous patient benefit in terms of the patient healing and getting home quicker.

Great. And for those in the room who are able to see our 36% stickers, you want to give them a little bit of background as to why we're wearing them?

Nice of you to ask. 36%. It's actually a really big thing happened last week, one of those transformational times, I think, for AVITA. Last week, at the European Burns Society meeting, a study was presented by Dr. Victoria Miles from the University Medical Center of New Orleans. And that study looked at, I think, 6,300 RECELL patients from the U.S. burn registry. It paired them in a 2:1 format with traditional full thickness skin grafts. And what it looked at was healing. And what the data showed in patients under 30% total body service area because that was the sample, and that actually represents the vast majority of full-thickness wounds in the burn world, a 36% reduction in length of stay.

Now turn that into a couple of other metrics for you. That's about a 6-day improvement in the length of hospital stay, which depending on what your cost per day is, which varies in hospital to hospital, but it's $10,000 to $12,000 a day. So you can do the math on that rather quickly. And that the patient gets home sooner, which is like the ultimate. So it saves money. They're in the hospital for a shorter time and they get their home to their family in a sooner time.

That's great.

So 36%, remember that.

Yes. It matters. And so that's RECELL, but you also have Cohealyx and PermeaDerm. So you're building out a full suite and solution of therapeutic acute wound care solutions. How do you think about capturing value across the same patient, the same wound and the same hospital pathway?

Come on, you took that right from me. That is how we see it. So our salesperson today versus our salesperson a year or 2 years ago, we used to be organized with a high percentage of our field employees were clinical specialists. Now that's a very low number and therefore very specialized use because a full thickness 10% total body surface area wound is really a 2-stage procedure. And in the first stage, you clean the wound up and you put in a dermal matrix. And in this case, that would be Cohealyx. It's made of bovine collagen, and it revascularizes the wound. And that revascularization ultimately in stage 2 is the receiver of those skin cells from the spray on skin cells of RECELL.

Now in both of those stages of procedure, the sales rep needs to be there to sell Cohealyx, then they're going to close that wound with PermeaDerm. And PermeaDerm is really unique in the sense that it's translucent, so you can see through it. That matters because when you're healing a skin graft, it's really sensitive. So instead of having to lift up the dressing to look, you can look right through it and see. At the same time, it's biosynthetic and it has a microporous, it stretches that make the pores larger, smaller. And the pores have a dual purpose. They let air in and they let exudate or the wound can express out through those same pores. n

So you have stage 1, clean the wound, with Cohealyx, cover with PermeaDerm, Stage 2, treat with RECELL, cover with PermeaDerm. And in fact, 10 days later, after care, one more Cohealyx just in case as potential. So now we have selling activity that needs to occur throughout the procedure where before we wouldn't be in the first stage at all necessarily because we had no purpose there. And in the second stage, the clinical specialists would often cover the case to support the user with training and those types of things. But now that's a selling activity included. So quite a different model.

Right. Very different. And as we then pivot towards financial profile, you guys showed a solid year-on-year growth in Q2, but unfortunately, missed expectations. Can you walk us through what happened? And what gives you confidence as we look through the back half of 2025?

Yes, that's a terrific question because I think in Q2, 2 things happened as we came to a full understanding of why both Q1 and Q2 were short of expectations, which had to do with a new CPT code that went into effect January 1. And it went into effect in a unique manner. The code was specific to RECELL. As it was developed by AMA and the CPT committee, the CMS was not pleased with the outcome. They thought it was too complex. So on the one hand, they said to AMA CPT committee in a very detailed way, here's what we want you to fix, go fix it. Well, that's about a 2-year process.

In the meantime, they said, you now have a code that you've created a specific, we want to assign that to contractor pricing. And for those of you who may or may not be familiar, the contractor pricing refers to Medicare administrative contractors, of which there are 7 that cover the United States that administer Medicare and Medicaid benefits. It's not completely uncommon for them to do contractor pricing, but it's not common either. And it takes them a while to get it organized and get harmony among them. They have an objective to handle technologies and claims and procedures commonly. And it took a few months before they got themselves organized and communicating. In the meantime, there was uncertainty around what and when the providers will be paid. That started manifesting itself right away in Q1. And that's something we wouldn't have natural visibility to. That's happening inside the billing department and claims were being delayed and in some cases, not paid correctly by the view of the provider.

And then later in May, the 7 MACs had a common meeting with the society, and they came to an understanding about how to handle this. And then they started implementing it. What we've seen here in Q3 is we see all of that coming to resolution. Now it cost us about $10 million in revenue, we estimate in diminished demand by that uncertainty in Q1 and Q2. And that's reflective in our forward guidance that we reset. So in our new guidance, year-over-year, we still are going to grow about 24%, but that is a disappointment from where we started. At the same time, what we see is profitability coming in Q2, Q3 next year, and we've guided to that, Q2 crossover, Q3 [ GAP ]. And this issue will, we think, fully resolve by the end of this quarter, and we'll see it in this quarter and more fully in Q4.

Okay. Great. And gross margins also came down a bit in Q2. And you touched a little bit on time line to profitability obviously is a flow-through. But what was driving that compression in gross margins? And how do you think about where it's trending towards?

Yes. Gross margin is really an interesting concept. So our resale gross margin runs around 87%. Our gross margin for PermeaDerm is about 60% and for Cohealyx, 50%. So as our mix grows, our percent gross margin is going to go down. But let me play out a little bit how that really works. Let's take a single patient that is 10% total body surface area. That would be a $6,500 RECELL at 85%. So give or take, $5,500 of gross profit dollars. In the case of that same 2,000 square centimeters at market price for the Cohealyx at the competitive market price, that would be $30,000.

At 50% gross profit, that would be 15,000 gross profit dollars, which would be 3x what we make for RECELL our proprietary home run product. And in the same case of PermeaDerm in which you might use -- let's imagine that you used $2,000 worth at 60%, you'd make -- you'd use it potentially as many as 2 or 3 times, you make $2,400 or $3,600 of gross profit dollars. So this all works under one other assumption, and that is that you're not increasing your SG&A, which we're not. So we don't foresee that for the next 2 years. We have -- we don't need to increase new accounts. We have -- there's about 120 burn accounts, and there's about 250 Level 1 and 2 trauma centers. So when you look at it through those eyes, our 82 headcount field team has, on average, 4 or 5 hospitals each, not too many. And they get that -- so we're a high touch still with less people than we used to have. And we have same wound, same patients, same doctor, same hospital. More dollars.

Yes. You've really sharpened up that commercial model, right? Fewer reps, higher productivity. And as you talked about with that broader portfolio, there's a lot of efficiency gains that are being generated. How do you think about this setup for the long term to fuel growth?

Well, I think for the long term, there are other adjacent same wound categories. For example, one we're working on right now is antimicrobial, where we would offer PermeaDerm and Cohealyx with and without antimicrobial agent in them as an example. Another example would be there are -- not anti-scarring, but reduced scarring technologies and treatments that we're studying and want to find a solution for that, in fact, improves the scarring outcome for these patients. So we think that we're wedded, so to speak, strategically to this adjacent market strategy for therapeutic versus chronic acute wound market and the adjacent needs for that patient and that doctor.

Yes. Great. And now with this leaner cost base and the recent raise that you all did, how do you think about cash runway and hitting breakeven by middle of '26?

Well, we feel quite good about it. Without -- I can give you one way to think about it. Our OpEx for example, per quarter is about $25 million. But of that, $2.5 million or so is noncash, $2.5 million to $3 million. So that puts to $22 million. So then you start thinking about at what revenue and what gross profit percentage. And that somewhere happens around $28 million. So with what we have in the pipeline, we see that the growth gets us there in Q2, Q3 next year. And of our current approximately $30 million in cash, we also carry that is not counting, of course, our accounts receivable and things like that. So we think we get to profitability very sufficiently with the cash we have. We think we start accumulating in the last half of next year. And we think that by the time the OrbiMed facility matures at the end of '27 that we'll be in a position to pay off that debt, which has always been the plan. We didn't want to -- we did the debt to diminish dilution, and we think we will ultimately do that.

Okay. Great. A big question within the space is always about reimbursement and adoption. So can you break down the value analysis committee process for Cohealyx? And once you're in, how quickly do accounts ramp?

So for Cohealyx, I think that's the big variable on the upside. And so value analysis committee submission is not a voluntary company choice. that is driven by physicians in the hospital who want it and a committee in the hospital accepts that submission. So that's the first hurdle that happens, right? So the next thing that happens is they have to calendar you for a meeting, the champion or champions need to show up and they have to prove it. Now we're offering a number of advantages that are unique. For example, it's a high-value inventory item. So that's a working capital issue for any hospital. And hospitals are notoriously -- they're low single-digit operating margin. So it matters.

We are in a place where we have put an RFID marker on all of our inventory. Our reps all have an RFID reader, and we put the inventory in on consignment. Now that has a number of advantages beyond the obvious. The obvious is the working capital, right? But the secondary benefit is real staff related because when they do consignment manually, what has to happen, they don't just let a sales rep walk in and start crawling around where they store product, it occupies a person or more. And when they lose it, what do they have to do? They have to find it and then that occupies a person. With RFID, all that goes away.

So the staff isn't necessarily in favor of consignment, notwithstanding it being good for the hospital. But under our model, they'll like it, right? So that's a secondary benefit. So the -- it also helps us with the value analysis committee approval because it's an advantage for them from a staff efficiency, economic efficiency. And they get a product that gets time to graft 7 to 14 days faster than anybody else's. So if you go back to my heart, 36%, if you're saving 36% of length of stay at 6 days and you get time to graft improvement of 7, that's 13, it's almost 2 weeks. Who wouldn't like that, right?

No, indeed. Sound's great. And maybe switching to reimbursement then. NTAP reimbursement for use of RECELL on non-burn trauma wounds kicks in October -- October 1. What kind of impact do you think that's going to have on the business? And how fast can hospitals move?

Well, yes, the NTAP is really targeted at nonthermal wounds and outpatient. And a lot of those patients, the hospital gets concerned about their costs and which is one reason they treat them outpatient. And this will give them an incentive to use RECELL, improve their margin and have them experience the length of stay result. It will manifest itself differently. The patients will heal faster when they get followed up. They'll have higher patient satisfaction scores. And recently, I learned that so many hospitals have a Chief Patient Experience Officer. And so this is the type of thing that would really affect that particular population.

So the reimbursement will help us motivate hospitals to adopt -- because really, if you think about it in a different way, this 36%, the NTAP are changes in protocol, okay? We had one of our biggest customers recently enter into an agreement with us that involved a commitment that we would reduce their length of stay. Otherwise, there would be some later discount. And they did that. They changed their protocol because they had a protocol not to treat patients under a certain total body surface area with RECELL because they saw RECELL as a supply cost. When you see it as a protocol change, you're selling something different. You're selling 13 days. When you're selling 13 days...

Much more impactful.

Yes.

That's great. And then just sticking on RECELL, there's multiple MACs who are now reimbursing RECELL. How is that for rebuilding physician confidence and growing use of patients?

Yes. So the MAC in essence, are resolving themselves in a positive way. Getting that communicated and verified for the physicians is a task. It's a task that the societies involved undertake themselves, and it's a task that we also help with ourselves because we'll get some proof sources, some EOBs essentially, and we'll communicate those to the physicians so that they know. And it's reassuring and it's a communication element that we have to execute well.

Okay. Great. I mean RECELL GO mini just started commercialization. Where are you starting to see the strongest traction in the early days? And what are you hearing from the field?

Yes. So RECELL GO mini has its foundation in the original trauma, which we called full-thickness skin defects, which is an acronym that FDA uses, but no one else does. It means a nonthermal trauma wound. And in that study out of nearly 60 patients, 58, I believe, but close, the average size of wound was 400 square centimeters. That is 2.5% total body surface area versus standard RECELL which is 10%. So there's a -- and the reason I make that point is there was a certain resistance kind of a cognitive distance to solve a 2.5% problem with a 10% solution, right? It seemed wasteful. And I think that's a credible thought on the part of the physician.

So we developed RECELL GO mini. It goes in the same RECELL GO device. So it doesn't require a separate processing device. It's just a different size cassette. Our response has been very positive towards those who look at it through the eyes of protocol. It's a different strategy for treating these patients in outpatient. And they have a lot of them. For example, you could have a surgical excision for a Mohs procedure. It's a perfect indication for RECELL GO mini because those are often smaller than 400 square centimeters and they need a skin graft. And so we're getting good success where protocol change is occurring. And that takes some time. But at the same time, we're able to do it.

And one of the things we find that's really fascinating is we find other wounds that don't need a skin graft, but they need a dermal matrix. So it's the same physician with his or her same wound. And so you're in there. So we had a case in was probably the first Cohealyx case. And Ohio State did the case and they did their own press release. And they had a patient who needed Cohealyx but not RECELL. And in the article, the physician was quoted as saying, "This patient left the hospital fully closed at 14 days and normally would have taken 30" which was transformative in that particular physician's way of thinking about how to treat these patients.

Yes. And you mentioned on your Q2 earnings call that you got a $300,000 order in July from a top-tier center that I think points to this commercial momentum that you're seeing in Cohealyx.

Well, for sure. Now it wasn't really one order from the one account. They ordered several times during the month, which is actually better.

Yes. Repeat customer.

Well, it shows they're utilizing the product, right? You didn't just sell a stocking order, you [ sold absolute new order ]. To give me a kind of a way to think about the potential behind Cohealyx. We have validated through claims data in the 122 or so burn centers that they use $1 billion worth of dermal matrix a year. So you can do the math on that and know that a hospital uses $8 million to $10 million worth, right? And we aren't quite at halfway. We're nearly closing in on half of the burn centers have Cohealyx already in a VAC process submitted.

Now you can do the math quickly on that. It's in the hundreds of millions of dollars of potential. Now you don't get all that at once because there's multiple physicians, there's competitors in the hospital already. But to have access to that market is really exciting, especially when you know that what you're bringing is so consistent with your fundamental theme, which is 36% length of stay, 7 days to graft, save 13 days, your patients are happier, your hospital is more profitable. You can use that bed. You know how many times more you can use the bed with the 36%? 13 more patients per year can occupy that bed.

That's a phenomenal stat. I mean you walked through a little bit of the TAM that you all have. But in reality, your TAM is $3.5 billion across trauma, surgery, outpatient. How do you think about those 3 sources of the TAM? What's scaling the fastest? Where do you see more of the longer-term opportunity?

Well, the longer-term opportunity is -- that's all the domestic potential, by the way. The way we're looking at this is through the eyes of our strength. So our strength, we're 5 years in the burn market, well established. So we are going there first. And by going there first, you build credibility, viability, revenue and margin. It's the whole stream. And you do it most efficiently. The expansion into the potential that exists in trauma and surgery will happen as an extension of that.

So if, for example, on an extreme level, we spent the next 18 months just developing our portfolio within burns, it would be a great outcome by itself. With the additional things that we can do, at the same time, you create a ramp that doesn't have a need to be steep. It can be steep as well as an individual hospital can accommodate protocol change. This is really all about protocol. It's all about how the patient gets treated. You can treat the patient, so they get out of the hospital sooner, costs less to treat and you can use the bed more or you can treat them in a way that uses the bed less, costs more to treat and they go home later.

Suboptimal. And you mentioned that, that's the $3.5 billion is that is a U.S. opportunity, right? That's right. With CE Mark expected, how important is going to Europe and abroad? And can you leverage what you've built in the U.S. outside of the U.S.?

To answer that, first, there's a bigger question is where do you go internationally? So let me step back and describe what we're thinking. So we intend to go to markets that fit 3 criteria, okay? The first criteria is they have to have a medical system that can use the technology. So that's a filter. The second is they have to have the ability to pay for it. And the third, a population to make a business. So that's actually rather restrictive because, for example, you can find places, and I don't mind saying, for example, in the Middle East, where there is some very wealthy segments of society, but in fact, very small amount that are really able to build a market around.

So the way we see that filter, it leads us to the European Union, which plus the U.K. And we think that we're starting from virtually 0. So we're going with local distribution partners because they bring us expertise in the local market on reimbursement, on physician relationships, on how business is conducted differently, say, in Germany versus Italy, right? So we're going there, but we're doing it with third-party partners for the next few years at least. And Japan, where we already have a burn approval, and we're working on a broader approval, but the and we do business there now. And Australia, and Australia is kind of a natural. It fits all 3 of those categories. It happens to also be where RECELL was invented. So there's some affinity there, which we care about.

Great. Look, we have about a minute left. What do you want folks who are in the room, folks who might be reading this transcript afterwards to take away about AVITA and where your profit is heading?

I think the best takeaway is that we did struggle with this reimbursement transition in the first half of the year and that it has passed us. The fundamentals of the business are in great shape. The products are in great shape. Quality is high. The portfolio is playing out the way we intended. And the structure of the company is at the place it needs to be for some time. So a lot of leverage ahead of us. And the reality is our future is quite bright. And I am completely motivated about it.

And 36%.

36%.

All right. Well, thank you so much for taking the time. It's always good to catch up, and congratulations on all the progress that you've made at the company.

Thank you very much.