Avita Medical (RCEL) AI Stock Analysis

• Market Cap: $143.28M
• Dividend Yield: N/A
• Average Volume (3M): 308.08K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.15
• Revenue Growth: 32.24%
• EPS Growth: -66.93%
• Country: US
• Employees: 260
• Sector: Healthcare
• Sector Strength: 39
• Industry: Medical - Devices
• EPS (TTM): -0.53
• Shares Outstanding: 26,434,658
• 10 Day Avg. Volume: 359,240
• 30 Day Avg. Volume: 308,083
• PEG Ratio: -0.08
• Price to Book (P/B): 73.64
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -5.69
• Enterprise Value/Market Cap: 2.54
• Enterprise Value/Revenue: 1.75
• Enterprise Value/Gross Profit: 6.59
• Enterprise Value/Ebitda: -1.88
• 1Y Price Target: $15.17
• Price Target Upside: 179.89% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

• Rating: 55 Neutral
• Price Target: ―

Avita Medical's stock score reflects a blend of strong revenue growth and technical momentum, offset by severe profitability challenges and high financial leverage. While future revenue projections and product expansions are promising, underlying financial weaknesses and valuation concerns present significant risks.

Positive Factors

Market Expansion

Avita's expanded portfolio of wound care solutions drastically increases its total addressable market potential to over $3.5B.

Profitability

Avita reported a healthy quarterly gross margin result of 84.7%, showing strong profitability despite a slight decline from the prior year.

Revenue Growth

The recent commercial launch of new products suggests a revenue inflection may be on the near-term horizon.

Negative Factors

Earnings Miss

Avita reported 1Q results which included commercial revenue totaling $18.5M, reflecting growth of 67% year over year, but this was shy of Street expectations which were at $20.8M.

Market Expectations

Despite strong growth, Avita's revenue still fell short of analysts' expectations, indicating potential market concern.

Avita Medical Business Overview & Revenue Model

Company Description

AVITA Medical Inc. operates as a commercial-stage regenerative tissue company in the United States, Australia, and the United Kingdom. It offers regenerative products to address unmet medical needs in burn injuries, trauma injuries, chronic wounds, and dermatological and aesthetics indications, including vitiligo. The company's patented and proprietary platform technology provides treatment solutions derived from the regenerative properties of a patient's own skin. Its lead product is RECELL System, a device that enables healthcare professionals to produce a suspension of Spray-On Skin cells using a small sample of the patient's own skin for use in the treatment of acute thermal burns in patients eighteen years and older. The company has a research collaboration with the University of Colorado School of Medicine to establish pre-clinical proof-of-concept for a spray-on treatment of genetically corrected cells; and a research collaboration with Houston Methodist Research Institute to explore molecular reversal of cellular aging through a novel cell suspension delivery system. The company was formerly known as AVITA Therapeutics, Inc. and changed its name to AVITA Medical Inc. in December 2020. AVITA Medical Inc. was incorporated in 2000 and is based in Valencia, California.

How the Company Makes Money

Avita Medical generates revenue primarily through the sale of its RECELL System, which is marketed to healthcare facilities and practitioners for the treatment of skin injuries. The company employs a direct sales model in major markets such as the United States, where it benefits from a strong network of relationships with hospitals and burn centers. Additionally, Avita Medical may engage in partnerships or licensing agreements to expand its market presence and product offerings, though specific partnerships are not detailed here. The company's earnings are driven by the adoption of its technology in clinical settings, reimbursed through healthcare insurance providers, and its ability to demonstrate the cost-effectiveness and clinical benefits of its products in comparison to traditional treatment methods.

Avita Medical Financial Statement Overview

Summary

Avita Medical's financial performance is marred by significant profitability issues and high leverage. Despite a strong gross margin, the deep negative net profit margin and high debt levels pose considerable risks. The company's negative cash flow metrics further highlight the challenges in achieving financial stability.

Income Statement

Avita Medical's TTM revenue growth of 19.7% shows positive momentum, but the company faces challenges with negative profitability metrics. The gross profit margin is strong at 85.7%, indicating effective cost management in production. However, the net profit margin remains deeply negative at -95.5%, with both EBIT and EBITDA margins also negative, reflecting significant operational and financial losses.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 3.73, indicating significant leverage and potential financial risk. The equity ratio stands at 15.1%, suggesting limited equity support relative to total assets. The return on equity is negative at -468.8%, driven by substantial net losses, highlighting challenges in generating returns for shareholders.

Cash Flow

The cash flow analysis shows negative free cash flow growth and operating cash flow, which is concerning. The operating cash flow to net income ratio stands at 0.90, suggesting inefficiencies in converting revenue into cash. Additionally, the free cash flow to net income ratio is 1.04, reflecting the company's continued struggles with cash flow generation.

Breakdown	Dec 2024	Dec 2022	Jun 2021	Jun 2020	Jun 2018
Income Statement
Total Revenue	64.25M	50.56M	14.26M	20.67M	1.26M
Gross Profit	55.16M	41.69M	11.29M	16.36M	517.47K
EBITDA	-55.34M	-39.57M	-41.53M	-61.17M	-18.55M
Net Income	-61.84M	-39.17M	-42.03M	-60.90M	-17.21M
Balance Sheet
Total Assets	79.71M	144.34M	82.46M	119.49M	23.00M
Cash, Cash Equivalents and Short-Term Investments	35.88M	116.55M	73.64M	106.70M	14.82M
Total Debt	45.98M	449.48K	1.92M	2.78M	134.25K
Total Liabilities	75.21M	19.87M	10.06M	14.58M	4.01M
Stockholders Equity	4.50M	124.47M	72.40M	104.91M	18.99M
Cash Flow
Free Cash Flow	-58.27M	-28.71M	-23.59M	-33.82M	-18.00M
Operating Cash Flow	-48.94M	-28.04M	-22.75M	-32.96M	-17.51M
Investing Cash Flow	37.36M	-28.40M	-847.00K	-1.23M	-493.15K
Financing Cash Flow	3.51M	1.32M	77.06M	111.66M	28.77M

Avita Medical Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 5.42
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCEL, the sentiment is Negative. The current price of 5.42 is below the 20-day moving average (MA) of 5.45, below the 50-day MA of 6.79, and below the 200-day MA of 9.49, indicating a bearish trend. The MACD of -0.38 indicates Negative momentum. The RSI at 43.62 is Neutral, neither overbought nor oversold. The STOCH value of 68.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RCEL.

Avita Medical Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ZIMV	57 Neutral	$286.20M	―	-6.35%	―	-32.70%	94.89%
SNWV	56 Neutral	$270.79M	―	0.65%	―	61.50%	34.99%
RCEL	55 Neutral	$143.28M	―	-407.50%	―	32.24%	-66.93%
INGN	55 Neutral	$201.39M	―	-14.10%	―	5.73%	72.50%
Sector *	52 Neutral	$7.50B	0.31	-61.87%	2.27%	17.10%	1.59%
TLSI	50 Neutral	$192.54M	―	271.41%	―	85.03%	53.73%
LUNG	46 Neutral	$111.92M	―	-60.68%	―	19.84%	5.77%