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 US 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 six 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 its 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.

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 two quarters, we've been focused on two specific priorities. First, stabilizing the business.

That meant working through the disruption to clinical reimbursement for RECELL, re-engaging our core accounts, and re-establishing a consistent, procedure-based demand cadence. Second, improving how we operate.

We simplified our focus around our highest-value centers, re-energized 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. We are reaffirming full-year guidance of $80 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 three 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 seven 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 re-engagement 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 in 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 US 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 healthcare 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. 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 Cohelex. 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 COHEAL-1 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 dataset 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 Cohelex, particularly around the consistency of outcomes, which is contributing to early repeat use. We expect the full dataset later this year, which will be an important next step in supporting broader adoption.

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 Cohelex 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-1 study later this year.

Early signals, including histology, indicate comparable biological performance to cadaveric allograft. Similar to Cohelex, 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.

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 two 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 Cohelex 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 Cohelex, RECELL GO mini, and improving RECELL utilization as reimbursement dynamics continue to normalize.

Importantly, we are seeing ordering patterns increasingly align 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 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 Cohelex 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 35 cents per basic and fully diluted share, an improvement compared to $13.9 million, or 53 cents per basic and fully diluted share, in the prior-year period. Now turning to cash, which we recognize is a key focus.

Net cash used for the quarter was approximately $9.9 million. As expected, cash used was higher in the first quarter, driven by seasonal compensation and other one-time payments, and was further elevated by the timing of revenue and collections.

Cash receipts obviously lag 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 one-time 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 use 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, and supports our ability to manage the business towards continued growth, improved cash efficiency, and ultimately, financial sustainability.

In summary, we are seeing sequential quarterly revenue growth with 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. 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 Cohelex clinical data, reinforcing its differentiation over other dermal matrices.

We've 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.

Great. Thank you for taking the questions, and 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 Cohelex.

If you would, that would be great. If not, maybe a backup question would be just speaking to maybe which one was a stronger driver of growth.

Was it a rebound in RECELL or kind of Cohelex coming up the curve pretty quickly? Thanks.

We're not going to break that out yet, but it was a combination of the two, Frank. We grew in RECELL and we grew in Cohelex.

Those are the two main drivers.

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? Then, obviously, the quarter was a little ahead of where Street expectations were and understand the appetite to put out expectations you can achieve.

Maybe talk through how you guys thought about maybe ticking the guide up a little bit just given how well it seems the recovery is going in Q1.

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 Cohelex. There's a lot of progress behind the scenes, behind the revenue number.

We expect to be able to retain that kind of progress that we had in Q1 into Q2 and capture three months of it, as opposed to maybe a month or two of it when we got new physician or new procedures on board in Q1. We expect that to build on itself kind of quarter over quarter.

That's why we speak to it in that way. More to come in a few months.

Helpful.

Thanks, Frank. Thank you.

Good afternoon, Cary, David, Ben. Thank you for taking the questions and congrats on the progress.

Just to put this behind us, Cary, on the MAC dynamics, I appreciate you sharing that the seven 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.

They've all published, and there was one MAC that their rate was below the others that they've brought that rate up in line with everyone else.

That's very helpful and really good to hear. This is just a part of this question, and I have a follow-up on BARDA, but just you made some comments about utilization and really smaller burns seeing some adoption.

I'm wondering if you can elaborate on what's driving that? Are you just explicitly targeting lower TBSA burns because they're more frequent?

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.

Like I said, just have one quick one on BARDA.

Sure. 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? Is it worth it economically?

Is it worth it in terms of the time and the workflow? 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 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.

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 in revenue, potential revenue.

I think $3.5 million, if I'm not mistaken, is guaranteed. David, how are you thinking about that coming through, when it comes through?

Any guidance would certainly be helpful there. Thanks for taking the questions.

Sure, Ryan. Good to hear from you.

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.

You can pretty much assume that it's going to be in about $100,000 per quarter, 30, 30 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. 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.

Appreciate it. Thank you.

Thanks, Ryan.

Thank you, and thank you for taking my question. Hi Cary.

Hi, David. 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 for to maybe for us to expect the company coming at the high end of guidance for the year? In light of the Cohelex data and the rest, what should we be aware of?

Thank you, Chris. Good to hear from you.

I think we've got one quarter under us, right? I think while I and the team have a good sense of confidence, me six 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.

I think for us it's a matter of seeing the progress throughout the course of the year. That'll give us a better level of kind of confidence, insight into where we would expect to finish the year.

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. Just a follow-up question regarding the smaller purchases that are coming through at the moment.

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. 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 a quarter.

Again, we would not do it that way if our customers didn't want it that way. It's really a combination of 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.

Thank you for that. Just one 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?

I think you have to look at it that we've stabilized the cost structure. I've talked about this previously.

The one variable that I hope goes up is commissions, because that's the one that will be an indicator that we're having more revenue. From a G&A and R&D and headcount perspective, our cost structure is where we want it to be.

Great. That's all I had.

Thanks very much.

Thanks, Chris.

Hi, good afternoon. Thanks for taking the questions and congratulations again, Cary, on getting the interim tag removed from your CEO title.

I was hoping to just start off, I know you've had a couple questions on MAC and you describe the progress of seven MACs publishing. Can you help us just think about this physician confidence and or burn center confidence in terms of getting reimbursed for RECELL, where we are there?

I think we're 50% to 75% back. I know you're banking on continued sequential growth over the course of this year, but maybe just help us think through where you are in that recovery and on the physician and center confidence front that they'll get reimbursed?

I'd I'd say 75% probably a good number. As we've talked over the last 3, 5 months, I've I've 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 is that, and then some of it is we're right now we're in a kind of blocking and tackling mode, healthcare system by healthcare system or hospital by hospital, where they have their own 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? Now, after the fact that that is kind of officially cleared up, now we kind of go hospital by hospital with our healthcare access team along with our commercial teams and make sure they understand how they get paid and how how to how to work through the process.

Thanks for that. Just coming out of ABA with the Cohelex update, 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. Then also if you could give us any just updates on the number of centers that are starting to use the entire portfolio: RECELL, Cohelex, and PermeaDerm, and seeing some of the initial traction of the portfolio build-out?

Thanks for taking all the questions.

Sure. I'll answer the second one first.

I think we're in the 20s in terms of centers that are using all three 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 Dr.

Katie Bush, as well as two of our physicians, and they spoke way better than we could about the day-to-day utilization and workflow of Cohelex and PermeaDerm as well as the study and some of those results, because both those things matter. Obviously, data matters, but so does the day in, day out and just the credibility that they have.

I encourage you all to go back and listen to that if you haven't already. 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 Cohelex competes very well with other dermal matrices.

I think we have some advantages as well. We just want to get out there and do that.

In order to do that, this data will help quite a bit as will 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 Cohelex. I think it's palpable and it's exciting.

I'm looking forward to the months ahead as, I would expect to see 12 to 15 Cohelex 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 VACs.

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. We're going to be clear to compete in every one of them.

Thank you, operator. 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 look forward to another great quarter. Thanks, everyone.