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Avita Medical (RCEL)
NASDAQ:RCEL
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Avita Medical
(NASDAQ:RCEL)
Rating:55Neutral
Price Target:―
Positive Factors
Market Expansion
Avita's expanded portfolio of wound care solutions drastically increases its total addressable market potential to over $3.5B.
New Product Launch
The company's recent commercial launch of new products suggests a revenue inflection may be on the near-term horizon.
Profitability
The company reported a healthy quarterly gross margin result of 84.7%, showing strong profitability despite a slight decline from the prior year.
Negative Factors
Earnings Expectations
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.
Revenue Guidance
Avita reiterated its 2025 revenue guidance, expecting sales to be in the range of $100M to $106M, reflecting growth of 55% to 65%.
Avita Medical (RCEL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$152.53M
Dividend YieldN/A
Average Volume (3M)292.18K
Price to Earnings (P/E)―
Beta (1Y)2.01
Revenue Growth32.24%
EPS Growth-66.93%
CountryUS
Employees260
SectorHealthcare
Sector Strength41
IndustryMedical - Devices
Share Statistics
EPS (TTM)-0.53
Shares Outstanding26,434,658
10 Day Avg. Volume262,044
30 Day Avg. Volume292,180
Financial Highlights & Ratios
PEG Ratio0.31
Price to Book (P/B)31.03
Price to Sales (P/S)0.00
P/FCF Ratio-2.42
Enterprise Value/Market Cap1.14
Enterprise Value/Revenue0.84
Enterprise Value/Gross Profit3.14
Enterprise Value/Ebitda-0.90
Forecast
1Y Price Target
$15.17Price Target Upside162.91% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Avita Medical Business Overview & Revenue Model
Company DescriptionAvita Medical (RCEL) is a regenerative medicine company that develops and commercializes innovative therapies for skin restoration. The company's flagship product, the RECELL System, is designed to harness the body's natural healing processes to treat a variety of skin injuries, including burns, chronic wounds, and scars. Operating primarily in the healthcare sector, Avita Medical aims to provide advanced medical solutions that improve patient outcomes and reduce the need for complex surgical interventions.
How the Company Makes MoneyAvita 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 Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -38.16%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in revenue, market expansion, and successful product launches, bolstered by operational efficiencies. However, challenges include a decrease in gross margin, higher-than-expected cash usage, and a pause in the vitiligo initiative. Overall, the positive aspects appear to outweigh the negatives.Q1-2025 Updates
Positive Updates
Revenue Increase
Revenue for the first quarter increased 67% over the first quarter of the prior year, indicating strong traction and growth potential.
Market Expansion
The US addressable market expanded from $500 million to more than $3.5 billion annually, a seven-fold increase that reshapes the company's long-term growth trajectory.
Product Launches
RECELL GO mini and Cohealyx were launched, targeting trauma centers and expanding product offerings. The feedback has been positive, with adoption already underway.
Operational Efficiency
Reconfiguration of the sales model and operational efficiencies are expected to save $2.5 million per quarter in operating expenses.
Improved Net Loss
Net loss for the first quarter improved to $13.9 million from $18.7 million in the same period in 2024.
Negative Updates
Gross Margin Decrease
Gross profit margin decreased to 84.7% from 86.4% during the same period in 2024, mainly due to volume discounts and product mix.
Higher Cash Usage
The $10.1 million cash usage was higher than anticipated, although steps have been taken to reduce future usage.
Vitiligo Initiative Paused
Investment in the vitiligo indication has been paused due to reimbursement uncertainties, shifting focus to acute wound care.
Company Guidance
During the AVITA Medical First Quarter 2025 Earnings Conference Call, significant guidance was provided on the company's strategic initiatives and financial outlook. CEO Jim Corbett highlighted a seven-fold increase in the U.S. addressable market, now estimated at over $3.5 billion annually, following the expansion into therapeutic acute wound care. The company's revenue for the first quarter increased by 67% year-over-year, driven by the deployment of RECELL GO and its expansion into trauma centers. AVITA launched RECELL GO mini, targeting smaller wounds in trauma settings, and Cohealyx, a collagen-based dermal matrix, both of which are expected to contribute significantly to revenue growth. CFO David O'Toole reiterated the full-year 2025 commercial revenue guidance of $100 million to $106 million, representing a 55% to 65% growth compared to 2024. Operating expenses are expected to decrease by approximately $2.5 million per quarter, aiming for GAAP profitability by Q4 2025. Despite a reported net loss of $13.9 million for the first quarter, the company remains confident in achieving its financial targets, bolstered by strategic sales force reorganization and increased adoption of new product offerings.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.40
Negative
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.45
Neutral
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.35
Negative
| 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
Neutral
5.77
Price Trends
5.74
Positive
7.27
Negative
9.12
Negative
Market Momentum
<0.01
Negative
51.48
Neutral
73.93
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCEL, the sentiment is Neutral. The current price of 5.77 is above the 20-day moving average (MA) of 5.54, above the 50-day MA of 5.74, and below the 200-day MA of 9.12, indicating a neutral trend. The MACD of <0.01 indicates Negative momentum. The RSI at 51.48 is Neutral, neither overbought nor oversold. The STOCH value of 73.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RCEL.
Avita Medical Risk Analysis
Avita Medical disclosed 38 risk factors in its most recent earnings report. Avita Medical reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Avita Medical Peers Comparison
Overall Rating
UnderperformOutperform
Sector (52)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $4.27B | 35.55 | 13.90% | ― | 247.53% | 118.34% | |
73 Outperform | $999.94M | 25.10 | 22.29% | ― | 5.34% | -50.52% | |
69 Neutral | $2.02B | 1,015.70 | 1.13% | ― | 14.80% | 530.21% | |
68 Neutral | $3.66B | 79.46 | 22.99% | ― | 64.43% | ― | |
68 Neutral | $1.58B | 13.35 | 12.96% | 1.57% | 4.20% | 43.62% | |
55 Neutral | $152.53M | ― | -407.50% | ― | 32.24% | -66.93% | |
52 Neutral | $7.64B | 0.11 | -63.04% | 2.08% | 16.35% | 0.29% | |
43 Neutral | $37.58M | ― | 41.08% | ― | 1.19% | 61.65% |
* Healthcare Sector Average
Performance Comparison
RCEL
Avita Medical
5.77
-4.11
-41.60%
VCEL
Vericel
40.12
-11.36
-22.07%
CNMD
Conmed
50.95
-18.25
-26.37%
KPTI
Karyopharm Therapeutics
4.35
-11.10
-71.84%
MDXG
MiMedx Group
6.77
-0.85
-11.15%
KRYS
Krystal Biotech
147.61
-57.58
-28.06%
TMDX
TransMedics Group
108.12
-30.88
-22.22%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.