Avita Medical Releases Q4 2024 & Full-Year Results
Taking a Look at Avita Medical's (RCEL) Earnings Results.
Could Approvals Ignite a New Era of Growth?
Yesterday after-hours, Avita Medical (RCEL) announced their Q4 2024 and full-year earnings results. Seems like the company’s revised guidance remains unchanged, but from the looks of it, they seem to be setting themselves up for long-term growth with their versatile product offerings. As of this post, RCEL seems to be appreciated by the market being up over 10% on the day so far.
Q4 2024 & Full-Year Results
Commercial Revenue: Reported at $18.4M, marking a 30% increase compared to $14.1M in Q4 2023. The company attributes this rise to broader market penetration by the newly launched RECELL GO system, particularly for full-thickness skin defects in trauma centers.
Gross Profit Margin: 87.6%, slightly above 87.3% in Q4 2023, reflecting solid pricing and manufacturing efficiencies.
Operating Expenses: Increased to $26.1M, up from $24.7M in Q4 2023.
Key drivers include:
Sales & Marketing: Grew by $3.9M due to expanded field teams and higher compensation costs as the company scales commercial efforts.
General & Administrative (G&A): Decreased by $0.6M, reflecting lower professional fees.
Research & Development (R&D): Declined by $1.9M, largely due to the conclusion of the vitiligo TONE study.
Net Loss: $11.6M (loss of $0.44 per share), compared to $7.1M (loss of $0.28 per share) in Q4 2023. The higher net loss was driven by increased commercial investments, partially offset by higher gross profit.
Cash: $35.9M.
Approvals & Portfolio Expansion:
Cohealyx (a collagen-based dermal matrix) received FDA 510(k) clearance on December 19, 2024.
RECELL GO mini received FDA approval on December 23, 2024. The device is designed for smaller wounds (≤480 cm), with a targeted rollout in Q1 2025.
Vitiligo Update: RECELL for vitiligo is not generating any commercial revenue at this time. While it has FDA approval, the lack of insurance reimbursement has prevented commercialization. The company is awaiting publication of post-market and health economics studies in early 2025, which will be critical for reimbursement efforts and future commercialization.
Full-Year Results
Commercial Revenue: $64M, a 29% increase YoY from $49.8M in 2023. Growth was driven by deeper penetration of RECELL in burn centers and by extending usage into trauma centers for full-thickness skin defects.
Gross Profit Margin: 85.8%, compared to 84.5% in 2023, largely driven by production efficiencies and higher unit volumes.
Operating Expenses: $111.8M versus $86.4M in 2023. The increase primarily reflects:
$20.9M in higher sales and marketing costs, tied to an expanded U.S. commercial team.
$4.9M rise in G&A from higher salaries and stock-based compensation.
Slight reduction in R&D costs, offset by larger investments in personnel, to support new product launches (RECELL GO).
Net Loss: $61.8M (loss of $2.39 per share), compared to $35.4M (loss of $1.40 per share) in 2023. The higher net loss was driven by increased operating expenses and lower non-operating gains prior year.
Outlook
2025 Revenue Guidance: AVITA Medical projects full-year 2025 commercial revenue of $100–106M, indicating ~55–65% growth over 2024. The company attributes this positive outlook to RECELL GO adoption, new product rollouts (Cohealyx & RECELL GO mini), and continued expansion in trauma and burn centers.
Path to Profitability: Management anticipates FCF in the 2H of 2025 and achieving GAAP profitability by Q4 2025 (Bold statement), driven by revenue growth, efficiency gains in manufacturing, and tighter control of operating expenses.
Global Approvals: The company expects to secure a CE mark for RECELL GO in the European Union by mid-2025, with international distribution partnerships ready to fulfill demand upon approval.
My Take
There’s a lot to love about this company’s future outlook, and it’s clear they’re poised for serious long-term growth once their versatile product lineup fully matures and continues expanding into target markets beyond/within the U.S. That said, there are a couple of points from this quarter that have me a bit concerned, which I’ll address before wrapping up on a positive note. If you’re checking in on this company for the first time, I highly recommend looking through my previous posts to get a feel for how they operate, what their products do, and what they ultimately aim to achieve.
Profitability
Avita isn’t profitable yet, and that largely comes down to high opex tied to their ongoing commercialization efforts and limited adoption outside their core burn treatment market. Even though they’ve shown impressive revenue growth—up 29% in 2024 to hit $64M—those gains haven’t been enough to balance out their rising costs. In fact, total opex jumped from $86.4M in 2023 to $111.8M in 2024, driven in large part by a $20.9M surge in sales and marketing expenses as the commercial team expanded and compensation climbed. Meanwhile, general and administrative costs rose by $4.9M, reflecting more salaries, benefits, and SBC.
A big factor weighing on profitability is Avita’s continued push to grow its product lineup, which, to be fair, is exactly what you’d expect. After relying on RECELL as its sole offering, Avita has rolled out RECELL GO, RECELL GO mini, PermeaDerm, and Cohealyx. While these additions greatly expand the TAM from $500M to $3.5B, they also require upfront investments in clinical validation, sales and marketing, and regulatory compliance. The lack of reimbursement for RECELL in vitiligo has put a damper on revenue growth, because insurance coverage remains a major hurdle for commercial adoption in that space. Although Avita has completed post-market and health economics studies, those findings still need to be published to support reimbursement efforts—until then, RECELL for vitiligo isn’t bringing in any revenue.
Insurance companies need real-world clinical evidence showing that RECELL provides long-term effectiveness, safety, and cost benefits over existing treatments before they will cover the procedure. The health economics study is particularly important in demonstrating that using RECELL reduces overall treatment costs, such as fewer doctor visits, lower hospitalization rates, or even reduced need for additional procedures. Without reimbursement, most hospitals and dermatologists are reluctant to use RECELL for vitiligo because patients would have to pay out-of-pocket, which limits demand. So, the “published data” can help persuade physicians and hospital committees that RECELL is a viable treatment option that should be integrated into SOC protocols for vitiligo. Additionally, vitiligo treatments currently include topical creams, phototherapy, and systemic drugs, some of which are covered by insurance. So, what they need is strong clinical and economic data to position RECELL as a superior alternative, showing that it provides faster and more lasting repigmentation compared to other options.
On top of everything else, rising interest expenses from long-term debt have put even more strain on bottom line. In 2024, interest expense climbed by $4.2M, largely due to the $40M in long-term debt under the OrbiMed credit agreement. At the same time, other income declined by $8.3M because 2023 results were boosted by a one-time $9.4M wind-down gain from a foreign subsidiary—an event that didn’t repeat in 2024. Despite maintaining strong gross profit margins of over 85% last year, they ended up posting a net loss of $61.8M (-$2.39 per share), which is notably wider than the $35.4M loss (-$1.40 per share) seen in 2023.
The foreign subsidiaries that Avita liquidated as part of its wind-down process included Avita Medical Pty Limited, Avita Medical Europe Limited, Visiomed Group Pty Ltd, C3 Operations Pty Ltd, and Infamed Pty Ltd. These entities were responsible for business operations in different regions:
Avita Medical Pty Limited (Australia) – Previously served as an operating company.
Avita Medical Europe Limited (United Kingdom) – Managed EMEA (Europe, Middle East, and Africa) operations.
Visiomed Group Pty Ltd (Australia) – Focused on Asia-Pacific operations.
C3 Operations Pty Ltd (Australia) – Functioned as a holding company.
Infamed Pty Ltd (Australia) – Was inactive before its dissolution.
As part of the liquidation process, they transferred its U.S.-based Avita Medical Americas LLC from C3 Operations Pty Ltd to be directly held by the company. This restructuring allowed the company to de-register the subsidiaries during 2024. So, the liquidation of these foreign subsidiaries resulted in a $9.4M foreign currency translation adjustment gain, which was reclassified from loss into earnings. This was just an accounting reallocation rather than a significant cash influx, meaning it did not materially improve the company's cash flow or profitability.
But moving forward, the company expects to generate FCF in the 2H of 2025 and reach GAAP profitability in Q4 2025. This will require continued revenue growth (projected 55-65% increase in 2025 to $100-$106M), successful commercialization of Cohealyx and RECELL GO mini, and tight control over opex, which the company has committed to keeping stable in 2025.
This snapshot of their annual revenue, including the original revised guidance, clearly shows an upward trend—one that will likely pick up even more steam heading into 2026/27/28. Still, profitability hinges on expanding product adoption, securing reimbursement for vitiligo, and executing their multi-product strategy without drastically increasing costs. Which brings me to my main concern, which I’ll share last.
Just burn market potential.
Avita's TAM has significantly expanded beyond burns now though, with new products targeting trauma centers and full-thickness wound care. Historically, they focused on burns, where its RECELL System has a TAM of $450M to $1.5B, obviously depending on adoption levels. That said, the company’s expansion into trauma centers with RECELL GO, Cohealyx, and PermeaDerm has dramatically increased its market potential.
Breakdown of Addressable Market
Burn Treatment Market (Hospitals Specializing in Burns):
RECELL System (Burns & Full-Thickness Wounds): $450M - $1.5B
Cohealyx (Dermal Matrix for Wound Healing): $1B
PermeaDerm (Biosynthetic Dressing for Wound Protection): $100M
Total TAM in Burns: $1.55B - $2.6B
Trauma Centers & Surgical Wound Market:
RECELL GO & RECELL GO Mini (Trauma & Small Wounds): $1.5B
Cohealyx (Wound Healing in Trauma Centers): $1.35B
PermeaDerm (Wound Dressing in Trauma Centers): $135M
Total TAM in Trauma & Surgical Wounds: $2.98B
Total Market Opportunity Across All Indications: $3.5B - $4.6B
Again, while RECELL is FDA-approved for vitiligo, it’s currently not contributing to revenue because the company is still working on securing insurance reimbursement. Once that hurdle is cleared, vitiligo could unlock a significant new revenue stream; but for now, it’s not factored into the TAM calculations. Taking a reasonable view, I’d put their realistic addressable market around $2.75B-$3.25B, with burns alone accounting for somewhere between $450M and $1.5B, and then trauma centers making up the rest.
Liquidity/Cash Position
With $35.9M in cash reserves as of December 31, 2024, and an expected quarterly burn rate starting at ~$9.1M in Q1 2025 and declining to ~$0.6M by Q4 2025, they are projected to end 2025 with approximately $14.8M in cash if revenue scales as expected.
Key Assumptions in the Projection
Revenue growth from $20M in Q1 to $30M in Q4 2025
85% gross margin maintained
Quarterly opex remain stable at ~$26.1M
Cash burn decreases as revenue ramps up
Will They Need to Raise Money?
If revenue growth follows projections, they could avoid a capital raise, but they would be left with only ~$14.8M in cash by year-end 2025, this is a slim cushion.
If revenue underperforms or expenses rise, the company may need to raise funds by mid-to-late 2025 to ensure adequate cash flow.
A small raise (~$25-30M) in mid-2025 could provide a buffer for future growth, especially if commercialization efforts for Cohealyx and RECELL GO take longer to reach scale. This should be assumptions that we expect going either way, in my opinion. Capital raise shouldn’t be looked at as the boogeyman if Avita truly does scale as projected.
So, they may not be forced to raise capital in 2025 if revenue growth stays on track, but the company will likely operate with a tight cash balance. A small capital raise could provide financial flexibility to execute its growth strategy without liquidity concerns.
Management
Here’s my biggest concern: management. We’ve seen them stumble on sales once, and we’ve witnessed them overpromise and underdeliver on their broader business execution not once, but twice. The sales hiccup, thankfully, was a temporary issue that’s been sorted out. What really bugs me is that as an unprofitable company, they keep making big promises and then not fully delivering on them—and if you look at the stock’s volatility, Wall Street clearly doesn’t take kindly to that. If they fall into the same trap again, especially with their bold claim to reach GAAP profitability by Q4 2025, The Street might just toss them aside entirely. That could lead to another painful drop in share price and cause many to lose faith in this leadership team. I’ve been wrong about management before (*sigh*), but I’m cautiously optimistic they’ve learned their lesson after going through this twice already. Only time will tell.
Everything else from management seems fine. CEO Jim Corbett showed some excitement on the call, “We are really excited about the transformation of our company, Avita Medical, into a therapeutic acute wound care company. We have a lot of excitement for the year ahead.” They just need to focus execution and not fall into this trap again.