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What changed in AVITA Medical, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of AVITA Medical, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+339 added−330 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-13)

Top changes in AVITA Medical, Inc.'s 2025 10-K

339 paragraphs added · 330 removed · 213 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

68 edited+42 added−59 removed26 unchanged
Biggest changeTo further our mission of improving clinical outcomes and establishing new standards of acute wound care, we have outlined the following strategic objectives: • Increase market penetration in U.S. burn centers, positioning RECELL GO ® as the standard of care in burn management • Expand adoption of RECELL GO for the treatment of full-thickness skin defects throughout the U.S • Begin a targeted RECELL GO mini rollout to trauma and burn centers treating smaller wounds in the first quarter of 2025 • Commence a post-market study of Cohealyx in early 2025 to develop clinical data for commercialization in the second quarter of 2025 • Seek additional business development opportunities complementary to our core RECELL technology and target markets • Obtain CE mark approval in the first quarter of 2025, allowing us to market RECELL GO in the European Union and Australia under existing distribution agreements • Continue developing opportunities and strengthening global partnerships to transform patient outcomes worldwide • Drive commercial revenue growth, generate positive cash flow, and achieve operating profitability 2 PRODUCT PORTFOLIO RECELL Technology Platform At the forefront of our portfolio is our patented and proprietary RECELL technology.
Biggest changeKey elements of our strategy include: • Increasing market penetration in U.S. burn centers, positioning RECELL as the standard of care in burn management; • Expanding adoption of RECELL for the treatment of traumatic and surgical wounds throughout the U.S.; • Commercializing and expanding adoption of Cohealyx as a dermal matrix that supports wound bed preparation and accelerates readiness for grafting; • Driving adoption of RECELL GO mini in burn and trauma centers treating smaller wounds; • Advancing post-market clinical studies for Cohealyx and PermeaDerm to generate additional clinical and health economic evidence supporting adoption; • Expanding internationally through distributor-led commercialization following regulatory approvals, including CE Mark approval for RECELL GO in Europe; • Driving commercial revenue growth, improving operating leverage, generating positive cash flow, and achieving long-term operating profitability; and • Pursuing additional business development opportunities complementary to our target acute wound care markets. 2 PRODUCT PORTFOLIO RECELL Technology Platform RECELL is an autologous cell harvesting technology that enables clinicians to create a suspension of a patient’s own skin cells, called Spray-On Skin ™ , at the point of care.
These activities include, but are not limited to, requiring certification of supplier in conformance to relevant cGMP requirements and other FDA and international agency regulatory requirements, approved supplier lists, and regularly Company-conducted audits. In addition, all goods and services purchased from suppliers by us must be purchased from only those suppliers on the approved supplier list.
These activities include, but are not limited to, requiring certification of supplier in conformance to relevant cGMP requirements and other FDA and international agency regulatory requirements, approved supplier lists, and Company-conducted audits. In addition, all goods and services purchased from suppliers by us must be purchased from only those suppliers on the approved supplier list.
Furthermore, the Company itself will continue to comply with all relevant FDA requirements and regulations and any applicable international agency regulatory requirements in its continued manufacturing and promotion of its FDA approved commercial products. In addition to FDA approval in the U.S., the RECELL System has received various approvals and registrations in international markets.
Furthermore, the Company itself will continue to comply with all relevant FDA requirements and regulations and any applicable international agency regulatory requirements in its continued manufacturing and promotion of its FDA approved commercial products. In addition to FDA approval in the U.S., RECELL has received various approvals and registrations in international markets.
The RECELL System is categorized as a Class III medical device, and in September 2018 the FDA granted our PMA for use in the treatment of acute thermal burns in patients 18 years and older. In June 2021, the FDA approved a supplement to our PMA to expand the use of RECELL in pediatric patients with full-thickness burns.
RECELL is categorized as a Class III medical device, and in September 2018 the FDA granted our PMA for use in the treatment of acute thermal burns in patients 18 years and older. In June 2021, the FDA approved a supplement to our PMA to expand the use of RECELL in pediatric patients with full-thickness burns.
If any unacceptable side effects were to occur, we may, or regulatory authorities may require us to, interrupt, limit, delay or abort the development of our potential products. 10 Any products manufactured or distributed by us pursuant to regulatory approvals are subject to continuing regulation by the FDA and similar agencies in other countries, including maintaining records supporting manufacturing and distribution under cGMP, periodic reporting, advertising, promotion, compliance with any post-approval requirements imposed as a conditional of approval, recordkeeping and reporting requirements, including adverse events experiences.
If any unacceptable side effects were to occur, we may, or regulatory authorities may require us to, interrupt, limit, delay or abort the development of our potential products. 9 Any products manufactured or distributed by us pursuant to regulatory approvals are subject to continuing regulation by the FDA and similar agencies in other countries, including maintaining records supporting manufacturing and distribution under cGMP, periodic reporting, advertising, promotion, compliance with any post-approval requirements imposed as a conditional of approval, recordkeeping and reporting requirements, including adverse events experiences.
In addition to the clinical support provided by BARDA, we managed an inventory system of RECELL Devices for BARDA to bolster emergency preparedness and support the logistics of emergency deployment of RECELL Systems for use in mass casualty or other emergency situations.
In addition to the clinical support provided by BARDA, we managed an inventory system of RECELL devices for BARDA to bolster emergency preparedness and support the logistics of emergency deployment of RECELL for use in mass casualty or other emergency situations.
In June 2023, the FDA approved a supplement to our PMA to expand the use of RECELL for full-thickness skin defects and an original PMA to expand the use of RECELL for the repigmentation of stable depigmented vitiligo lesions.
In June 2023, the FDA approved both a supplement to our PMA to expand the use of RECELL for full-thickness skin defects and an original PMA to expand the use of RECELL for the repigmentation of stable depigmented vitiligo lesions.
We maintain a state of regulatory compliance and inspection readiness at all times, and any future material changes to our production processes for the RECELL System will be submitted for approval to the FDA and regulatory authorities in other jurisdictions as required. Within the Ventura facility we perform the final manufacturing, assembly, packaging, and warehousing of the RECELL System.
We maintain a state of regulatory compliance and inspection readiness at all times, and any future material changes to our production processes will be submitted for approval to the FDA and regulatory authorities in other jurisdictions as required. Within the Ventura facility we perform the final manufacturing, assembly, packaging, and warehousing of RECELL and PermeaDerm.
Local and state authorities may conduct periodic inspections in order to review and ensure our compliance with the various regulations. We are not presently aware of any material violations or deficiencies. These laws, regulations and permits could potentially impose additional costs related to compliance or remediation.
Local and state authorities may conduct periodic inspections in order to review and ensure our compliance with the various regulations. We are not presently aware of any material violations or deficiencies relating to these requirements. These laws, regulations and permits could potentially impose additional costs related to compliance or remediation.
Subcontractors are subject to periodic announced and unannounced inspections by the FDA and other agencies for compliance with cGMP. We have established processes in place for categorization of vendor criticality and the associated activities for qualification and monitoring of vendors.
Subcontractors are subject to periodic announced and unannounced inspections by the FDA and other agencies for compliance with cGMP. We have established processes for the categorization of vendor criticality and the associated activities for qualification and monitoring of vendors.
We also lease a limited amount of incubator space in Irvine, California for scientific research and product development activities. MANUFACTURING, SUPPLY AND PRODUCTION We produce the RECELL System in the Ventura facility under current Good Manufacturing Practices (“cGMP”) and per ISO 13485, which also meets the regulatory requirements of other jurisdictions in which we sell the RECELL System.
We also lease a limited amount of incubator space in Irvine, California for scientific research and product development activities. MANUFACTURING, SUPPLY AND PRODUCTION We produce RECELL and PermeaDerm in our Ventura facility under current Good Manufacturing Practices (“cGMP”) and per ISO 13485, which also meets the regulatory requirements of other jurisdictions in which we sell RECELL.
It is not uncommon in the treatment of wounds to have rotating staff and it is our commitment for all those working with RECELL to be comfortable with the technology both during the procedure as well as during aftercare. Our commercial organization is composed of highly experienced medical sales representatives as well as former burn and trauma nurses.
It is not uncommon in the treatment of wounds to have rotating staff and it is our commitment for all those working with our products to be comfortable with our technologies both during the procedure as well as during aftercare. Our commercial organization is composed of highly experienced medical sales representatives as well as former burn and trauma nurses.
Between 2015 and December 31, 2024, we have received an aggregate total of $40.5 million in payments under the contract with BARDA. As of December 31, 2023, we no longer have a contractual obligation to manage an inventory system for BARDA.
Between 2015 and December 31, 2025, we have received an aggregate total of $40.7 million in payments under the contract with BARDA. As of December 31, 2023, we no longer have a contractual obligation to manage an inventory system for BARDA.
AVAILABLE INFORMATION The Company files annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (“SEC”) under the Exchange Act. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
AVAILABLE INFORMATION The Company files annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934 (the “Exchange Act”). The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Additionally, our innovative technology is supported by robust intellectual property rights and we believe that regulatory approval processes around the world will continue to provide additional and significant barriers to entry against meaningful competition.
Additionally, our innovative technology is supported by our expanding intellectual property portfolio and we believe that regulatory approval processes around the world will continue to provide additional and significant barriers to entry against meaningful competition.
The RECELL System is TGA-registered in Australia, received CE-mark approval in Europe, and received Japan’s PMDA approval for burns in Japan. HEALTHCARE LAWS AND REGULATIONS AVITA Medical is a manufacturer of medical devices, and therefore we are subject to regulations by the FDA and various federal and state healthcare laws and regulations.
RECELL (including RECELL GO) has received CE-mark approval in Europe; RECELL, excluding RECELL GO, has received PMDA approval for burns in Japan and is TGA-registered in Australia. HEALTHCARE LAWS AND REGULATIONS AVITA Medical is a manufacturer of medical devices, and therefore we are subject to regulations by the FDA and various federal and state healthcare laws and regulations.
These regulations govern our advertising and promotional practices, our interactions with healthcare providers (“HCPs”), and our reporting of any payments made to HCPs. AVITA Medical is committed to the highest standards of business conduct in accordance with the AdvaMed Code of Ethics.
These regulations govern our advertising and promotional practices, our interactions with healthcare providers (“HCPs”), and our reporting of any payments made to HCPs. AVITA Medical is committed to the highest standards of business conduct in accordance with the AdvaMed Code of Ethics on Interactions with Health Care Professionals (the “AdvaMed Code”).
GOVERNMENT REGULATIONS The production and marketing of the RECELL System and any additional product candidates developed in future ongoing research and development activities are subject to regulation by numerous governmental authorities including the FDA in the U.S. and similar agencies in other countries throughout the world.
GOVERNMENT REGULATIONS The production and marketing of our current products, as well as any additional product candidates developed in future ongoing research and development activities, are subject to regulation by numerous governmental authorities including the FDA in the U.S. and similar agencies in other countries throughout the world.
We are also subject to similar regulations under the Australian bribery laws and other anti-corruption laws that apply in countries where we do business. 11 Federal and State Reporting Pursuant to the federal National Physician Payment Transparence Program (Open Payments) Act, AVITA Medical is required to report any payments or transfers of value to HCPs annually to the Centers for Medicare and Medicaid Services within the HHS.
We are also subject to similar regulations under the Australian bribery laws and other anti-corruption laws that apply in countries where we do business. Federal and State Reporting Pursuant to the federal National Physician Payment Transparence Program (Open Payments) Act, AVITA Medical is required to annually report certain payments or transfers of value to HCPs annually to CMS.
FACILITIES AVITA Medical leases approximately 17,500 square feet of administrative and office space in Valencia, California that is currently leased through October 31, 2026. The Company operates an FDA-registered production plant in Ventura, California, in a 27,480 square foot facility that is currently leased through September 30, 2027.
FACILITIES AVITA Medical leases approximately 17,500 square feet of administrative and office space in Valencia, California that is currently leased through October 31, 2026. We operate an FDA-registered production plant in Ventura, California, in a 27,840 square foot facility that is currently leased through September 30, 2030.
On May 29, 2024, the FDA approved our PMA supplement for RECELL GO, our next generation autologous cell harvesting device, to treat thermal burn wounds and full-thickness skin defects. On December 23, 2024, the FDA approved RECELL GO mini.
On May 29, 2024, the FDA approved our PMA supplement for RECELL GO, our next generation autologous cell harvesting device, to treat thermal burn wounds and full-thickness skin defects. On December 23, 2024, the FDA approved RECELL GO mini. Cohealyx and PermeaDerm have both received 510(k) clearance from the FDA.
Such guidelines prohibit medical device manufacturers from offering or providing certain types of payments or gifts to health care providers; and/or require the disclosure of gifts or payments to healthcare providers. Interactions with Foreign Officials and Entities The U.S.
Such guidelines prohibit medical device manufacturers from offering or providing certain types of payments or gifts to health care providers; and/or require the disclosure of gifts or payments to healthcare providers.
FDA Regulatory Approvals Date Device / Indication Description September 2018 RECELL 1920 Indicated for treating second- and third-degree acute thermal burns in patients 18 years and older. Commercialization commenced in January 2019 in the U.S.
FDA Regulatory Approvals Date Device / Indication Description September 2018 RECELL 1920 Indicated for treating acute partial-thickness thermal burns and acute full-thickness thermal burns in combination with meshed autografting in patients 18 years and older. Commercialization commenced in January 2019 in the U.S.
CORPORATE HISTORY AVITA Australia, the former parent company of AVITA Medical, was founded in December 1992. On October 1, 2019, AVITA Australia began trading its American Depositary Shares on the Nasdaq Capital Market (“Nasdaq”) under the symbol “RCEL”.
Cohealyx was commercially launched in the U.S. on April 1, 2025. CORPORATE HISTORY AVITA Medical Limited (“AVITA Australia”), the former Australian parent company of AVITA Medical, was founded in December 1992. On October 1, 2019, AVITA Australia began trading its American Depositary Shares on the Nasdaq Capital Market (“Nasdaq”) under the symbol “RCEL”.
However, from that date through September 28, 2025, we will provide access to RECELL inventory in the event of a national emergency. BARDA will pay for any devices requisitioned from this inventory along with a nominal annual maintenance fee to ensure first right of access. 9 COMPETITION We currently believe that there is no direct competition for RECELL.
However, from that date through September 28, 2025, we had an agreement to provide access to RECELL inventory in the event of a national emergency. Under that agreement, BARDA would pay for any devices requisitioned from this inventory along with a nominal annual maintenance fee to ensure first right of access.
RESEARCH & DEVELOPMENT Our research and development activities are focused on advancing our innovative products and building a comprehensive portfolio of solutions, as well as developing clinical applications to advance the management of wound care. Additionally, we continue to conduct clinical studies to provide further efficacy and health economic evidence.
RESEARCH & DEVELOPMENT Our research and development activities are focused on advancing our innovative products and building a comprehensive portfolio of solutions, as well as developing clinical applications to advance the management of wound care.
While a small number of materials remain single sourced, we are actively working to qualify and validate additional suppliers for these materials as we continue to evaluate methods of removing risk from the supply chain for the RECELL System.
While a small number of materials remain single-sourced, we are actively working to qualify and validate additional suppliers for these materials as we continue to evaluate methods of removing risk from our supply chain. Additionally, in the second half of 2024, we implemented lean manufacturing methods to increase efficiencies in the production of RECELL.
We embrace differences, diversity and varying perspectives amongst our employee base and are proud to be an equal opportunity employer.
None of our employees are covered by collective bargaining agreements. We embrace differences, diversity and varying perspectives amongst our employee base and are proud to be an equal opportunity employer.
Additionally, in adult patients with greater than 50% TBSA (N=318), RECELL resulted in a 60% reduction in the mean number of autograft procedures versus NBR data. 4 In addition to these clinical benefits, RECELL has proven health economic benefits and a compelling cost-effectiveness model.
Additionally, in adult patients with greater than 50% TBSA (N=318), RECELL resulted in a 60% reduction in the mean number of autograft procedures versus NBR data. In addition to these clinical benefits, RECELL has demonstrated meaningful health-economic advantages across a range of burn severities.
June 2021 Expanded use of RECELL 1920 Approved for use in combination with meshed autografting for acute full-thickness thermal wounds in both pediatric and adult patients, and for full-thickness thermal burns over 50% total body surface area (“TBSA”). February 2022 RECELL EOU Approved a single-use device providing a more efficient user experience and streamlined workflow.
June 2021 Expanded use of RECELL 1920 Approved for use in combination with meshed autografting for acute full-thickness thermal burns in both pediatric and adult patients, and for full-thickness thermal burns over 50% total body surface area (“TBSA”).
In July, we entered into an exclusive multi-year development and distribution agreement with Regenity Biosciences (“Regenity”), granting us exclusive rights to market, sell, and distribute Cohealyx, an AVITA-medical branded collagen-based dermal matrix in the U.S., with potential expansion into the European Union, Australia, and Japan. These agreements strengthen our commitment to offering a comprehensive suite of solutions for acute wounds.
In July 2024, we entered into an exclusive multi-year development and distribution agreement with Collagen Matrix, LLC d/b/a as Regenity Biosciences (“Regenity”), granting us exclusive rights to market, sell, and distribute Cohealyx, an AVITA-medical branded collagen-based dermal matrix in the U.S., with potential expansion into the European Union (“E.U.”), Australia, and Japan.
June 2023 Full-thickness skin defects Granted based on pivotal trial results for soft tissue repair and reconstruction. Commenced commercial launch in June 2023. June 2023 Repigmentation of stable depigmented vitiligo Expanded RECELL EOU indication for stable depigmented vitiligo lesions.
February 2022 RECELL EOU Approved a single-use device providing a more efficient user experience and streamlined workflow. 3 June 2023 Full-thickness skin defects Expanded RECELL EOU indication based on pivotal trial results for soft tissue repair and reconstruction. Commenced commercial launch in June 2023. June 2023 Repigmentation of stable depigmented vitiligo Expanded RECELL EOU indication for stable depigmented vitiligo lesions.
In the burns and non-burn wound markets, our indirect competitor is primarily split-thickness autografts. While RECELL complements autografts for the treatment of various wound injuries, split-thickness autografts represent the traditional surgical procedure and the current standard of care. However, based on our clinical trials, we believe that RECELL offers sustainable competitive, clinical, and economic advantages over the traditional surgical procedure.
In both the burn and non-burn wound markets, our indirect competitor is primarily split-thickness autografts. While RECELL complements autografts for the treatment of various wound injuries, split-thickness autografts represent the traditional surgical procedure and the current standard of care.
The Company continues to collaborate with both Medicare and commercial payers to expand coverage and ensure appropriate reimbursement for the RECELL System and its associated procedures, aiming to enhance patient access and support broader adoption in clinical practice.
The Company continues to collaborate with both Medicare and commercial payers to expand coverage and ensure appropriate reimbursement for RECELL and its associated procedures, aiming to enhance patient access and support broader adoption in clinical practice. The U.S. burn treatment market is highly concentrated, with approximately 140 specialized burn centers treating the majority of severe burn patients.
SALES AND MARKETING Our commercial organization is focused on clinical case support, staff training, and building awareness to further expand interest in the clinical and economic benefits of RECELL.
Additionally, we continue to conduct clinical studies to provide further efficacy and health economic evidence. 6 SALES AND MARKETING Our commercial organization is focused on clinical case support, staff training, and building awareness to further expand interest in the clinical and economic benefits of our acute wound care products.
While animal model results do not necessarily translate to clinical results, this expedited timeline is anticipated to lead to quicker wound closure and streamlined clinician workflows, resulting in shorter hospital stays, reduced treatment costs, and better patient outcomes. The FDA granted 510(k) clearance for Cohealyx on December 19, 2024.
While animal model results do not necessarily translate to clinical results, this expedited timeline is anticipated to lead to quicker wound closure and streamlined clinician workflows, improving patient outcomes, and resulting in potential reduction in both treatment costs and hospital stays.
This market expansion allows us to reach more trauma centers, leveraging our existing resources and creating synergies with the burns market. From a reimbursement perspective, the same DRG code that is currently being used to treat inpatient burns is now being applied for the treatment of full-thickness skin defects.
From a reimbursement perspective, the same DRG code that is currently being used to treat inpatient burns is now being applied for the treatment of full-thickness skin defects.
INTELLECTUAL PROPERTY We protect our intellectual property, core technologies, and other know-how through a combination of patents, trademarks, trade secrets, and IP protection clauses in our agreements. Additionally, we rely on our research and development program, clinical trials, know-how and marketing programs to advance our products and product candidates, and to expand our intellectual property rights.
Additionally, we rely on our research and development program, clinical trials, know-how and marketing programs to advance our products and product candidates, and to expand our intellectual property rights.
BARDA CONTRACT BARDA, under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services (“HHS”) has supported our company since 2015. A contract with BARDA provided funding for the development of the RECELL System. The BARDA contract also supported the Company’s clinical trial in soft-tissue reconstruction, which led to the full-thickness skin defect indication.
A contract with BARDA provided funding for the development of the RECELL. The BARDA contract also supported the Company’s clinical trial in soft-tissue reconstruction, which led to the full-thickness skin defect indication.
Cohealyx features an advanced bovine collagen-based design engineered to facilitate tissue integration and revascularization resulting in reduced treatment timelines and improved patient outcomes in full-thickness wounds. Preclinical studies in porcine models demonstrated that Cohealyx generated robust tissue capable of consistently supporting a split-thickness skin graft in a two-stage procedure earlier than leading dermal matrices in the study.
Preclinical studies in porcine models demonstrated that Cohealyx generated robust tissue capable of consistently supporting a split-thickness skin graft in a two-stage procedure earlier than leading dermal matrices in the study.
We believe that our current manufacturing capacity at the Ventura facility is sufficient to meet the expected commercial demand for the RECELL System for burns, full-thickness skin injuries, and other indications under development, for the foreseeable future. Additionally, in the second half of 2024, we implemented lean manufacturing methods to increase efficiencies in the production of the RECELL System.
We believe that our current manufacturing capacity at the Ventura facility is sufficient to meet the expected commercial demand for burns, full-thickness skin injuries, and other indications under development, for the foreseeable future. AVITA Medical ships its products directly from our Ventura facility to customers and distributors.
While waiting for donor skin, these burn wounds may be temporarily covered with allograft (cadaver skin) or xenograft (typically pig skin). As such, treatment with STSGs is expensive, costing around $579,000 and 59.4 days in hospital for a patient with a 40% TBSA burn injury to recover and return to normal day to day activities.
As such, treatment with STSGs is expensive, costing around $579,000 and resulting in an average hospital stay of 59.4 days for a patient with a 40% TBSA burn injury to recover and return to normal daily activities.
In pediatric cases (N = 284), treatment with RECELL resulted in a 56% reduction in the mean number of autograft procedures required compared to National Burn Repository ( “ NBR ” ) data.
Retrospective studies further demonstrated that fewer autografting procedures are required for definitive closure of full-thickness burns when RECELL is used compared to conventional autografting alone. In pediatric cases (N = 284), treatment with RECELL resulted in a 56% reduction in the mean number of autograft procedures required compared to National Burn Registry ( “ NBR ” ) data.
At the forefront of our portfolio is our patented and proprietary RECELL, approved by the United States Food & Drug Administration (“the “FDA”) for the treatment of thermal burn wounds and full-thickness skin defects, and for repigmentation of stable depigmented vitiligo lesions. In 2024, we expanded our product offerings to address additional acute wound care needs.
At the forefront of our portfolio is RECELL, approved by the United States Food & Drug Administration (the “FDA”) for the treatment of thermal burn wounds and full-thickness skin defects. While RECELL is also approved in the United States for restoring pigmentation of stable depigmented vitiligo lesions, we have paused further commercial investment in vitiligo at this time.
The Ventura facility has one 3-year option to extend the lease, at our sole option, which allows for a total lease extension period through September 30, 2030. The Company also has an administrative office lease in Irvine, California of approximately 10,700 square feet that is currently leased through the end of July 2028.
We also lease a 3,360 square foot storage facility adjacent to our existing production plant in Ventura under a lease agreement that expires on September 30, 2030. We also have an administrative office lease in Irvine, California of approximately 10,700 square feet that is currently leased through the end of July 2028.
In January, we signed an exclusive multi-year distribution agreement with Stedical Scientific, Inc. (“Stedical”) to market, sell, and distribute PermeaDerm, a biosynthetic wound matrix in the U.S.
In 2024 and 2025, we expanded our product offerings to address additional acute wound care needs. In January 2024, we entered into an exclusive multi-year distribution agreement with Stedical Scientific, Inc. (“Stedical”) to market, sell, and distribute PermeaDerm, a biosynthetic wound matrix in the United States (“U.S.”). In March 2025, we entered into a multi-year agreement to also manufacture PermeaDerm.
Interactions with Healthcare Providers Providing any benefits or advantages to HCPs in order to induce or encourage the use or referral of AVITA products is strictly prohibited by both U.S. and international laws and regulations. Restrictions under applicable federal and state healthcare laws and regulations include but are not limited to the following: • The federal healthcare Anti-Kickback Statute (“AKS”).
We are members of AdvaMed and have been AdvaMed-certified since December 2025, reflecting our commitment to ethical, transparent, and compliant interactions with healthcare providers. Interactions with Healthcare Providers Providing any benefits or advantages to HCPs in order to induce or encourage the use or referral of AVITA products is strictly prohibited by both U.S. and international laws and regulations.
Today, our common stock continues to trade on Nasdaq under “RCEL” and our CHESS Depositary Interests (“CDIs”) trade on the Australian Securities Exchange (“ASX”) under the symbol “AVH.” STRATEGY Prior to 2024, our business was centered around our breakthrough RECELL technology.
Today, our common stock continues to trade on Nasdaq under “RCEL” and our CHESS Depositary Interests (“CDIs”) trade on the Australian Securities Exchange (“ASX”) under the symbol “AVH.” STRATEGY RECELL remains the cornerstone of our business; however, beginning in 2024 we evolved AVITA Medical into a multi-product acute wound care platform company.
These assets cover the all-in-one RECELL product, RECELL GO, methods of using the RECELL System, methods of evaluating the therapeutic potential of Regenerative Epidermal Suspension (“RES”), a cell-free and allogeneic RES supernate, and methods of preparing a cell suspension with exogenous agents to promote wound healing. 8 Additionally, AVITA Medical owns and defends a global trademark portfolio comprising 148 registered trademarks, common or state law trademarks, and pending trademark applications, including “AVITA Medical,” the AVITA Medical logo, “RECELL,” “RECELL GO”, the RECELL GO logo, “Spray-On Skin,” the RECELL System logo, “Cohealyx,” the Cohealyx logo, and others in the U.S. and international markets.
Our owned U.S. and foreign patents and patent applications generally relate to devices for preparing regenerative epidermal suspensions for skin regeneration and wound healing, methods for harvesting and preparing cells for transplant or treatment of a tissue site, including automated preparations, methods of treating a tissue site with a regenerative epidermal suspension, methods of preparing a regenerative suspension with exogenous agents to promote wound healing, methods of evaluating the therapeutic potential of regenerative epidermal suspension, and methods of preparing a cell-free and allogeneic regenerative epidermal suspension supernatant. 7 Additionally, as of December 31, 2025, we owned 147 registered trademarks, common or state law trademarks, and 17 pending trademark applications, including “AVITA Medical,” the AVITA Medical logo, “RECELL,” “RECELL GO”, the RECELL GO logo, “RECELL GO mini”, “Spray-On Skin,” the RECELL logo, “Cohealyx,” the Cohealyx logo, and others in the U.S. and international markets.
A diverse workforce as well as an inclusive culture and work environment are fundamentally important and strategic to us, beginning with our Board of Directors and CEO and extending to all levels of the Company.
A diverse workforce as well as an inclusive culture and work environment are fundamentally important and strategic to us, starting at the leadership level and extending to all levels of the Company. As of December 31, 2025, the Directors of the Company were 33% female, our senior executive team was 40% female, and our total employee base was 52.5% female.
How RECELL Works The core platform technology of RECELL enables clinicians to harvest a thin split-thickness skin sample from the patient and process it into an autologous cellular suspension, Spray-On Skin Cells.
The technology allows clinicians to treat large wounds using a small donor skin sample, reducing donor site morbidity while maintaining or improving healing outcomes. How RECELL Works RECELL enables clinicians to harvest a thin, split-thickness skin sample from the patient and process it into an autologous cellular suspension in approximately 30 minutes.
RECELL has demonstrated the ability to reduce donor-site harvesting requirements while maintaining or improving clinical outcomes. Pivotal clinical studies indicated that using RECELL significantly reduced donor-skin requirements by up to 97.5% for second-degree burns and 32% for third-degree burns when used with autografts, compared to standard of care autografting, without comprising healing.
In pivotal clinical trials, RECELL significantly reduced donor-skin requirements by up to 97.5% for second-degree burns and 32% for third-degree burns when used with meshed autografts, compared to standard of care autografting, without compromising healing. Additionally, a clinical trial for second-degree burns revealed a statistically significant reduction in patient-reported pain, increased patient satisfaction, and improved scar outcomes.
December 23, 2024 RECELL GO mini Next-generation autologous cell harvesting device to treat thermal burn wounds and full-thickness skin defects; designed for smaller wounds (up to 480 cm²). Targeted rollout expected in Q1 2025.
December 23, 2024 RECELL GO mini Next-generation autologous cell harvesting device to treat thermal burns and full-thickness skin defects; designed for smaller wounds (up to 480 cm²). Market Opportunity Burn Injuries In the U.S., approximately 40,000 people have burn injuries severe enough to require hospital admission annually, with an inpatient mortality rate of 2.7%.
RECELL GO significantly reduces the training burden on medical staff, improves workflow efficiency in the operating room, and precisely regulates the incubation times of the RECELL Enzyme ™ to optimize cell yield and promote cell viability.
RECELL GO standardizes the preparation of Spray-On Skin Cells, significantly reducing the training burden on medical staff, improving workflow efficiency in the operating room, and precisely regulating the incubation times of the RECELL Enzyme ™ to optimize cell yield and promote cell viability. • RECELL GO mini Autologous Cell Harvesting Device (“RECELL GO mini”): A line extension of RECELL GO designed to treat smaller wounds up to 480 cm 2 .
We maintain a website at www.avitamedical.com. Information contained on our website is not part of or incorporated into this Annual Report. ORGANIZATIONAL STRUCTURE As of December 31, 2023, the business activities of AVITA Medical Pty Limited, AVITA Medical Europe Limited, Visiomed Group Pty Ltd, C3 Operations Pty Ltd and Infamed Pty Ltd were liquidated.
We maintain a website at www.avitamedical.com. Information contained on our website is not part of or incorporated into this Annual Report. 11
We expect the RECELL GO platform to serve as a growth driver, further advancing our strategy to expand our impact on patient care. • RECELL Autologous Cell Harvesting Device (“RECELL 1920”): The first RECELL device offered in the U.S. is a single-use, stand-alone, battery operated, autologous cell harvesting device containing enzymatic and buffer solutions, sterile surgical instruments, and actuators.
We expect the RECELL GO platform to serve as a growth driver, further advancing our strategy to expand our impact on wound healing and patient care. Key U.S.
Item 1. BUSINESS OVERVIEW AVITA Medical is a leading therapeutic acute wound care company delivering transformative solutions. Our technologies are designed to optimize skin restoration procedures, effectively accelerating patient healing and recovery. Our solutions improve the healing outcomes for patients with traumatic injuries and surgical repairs, addressing critical healing needs that arise from unpredictable and life-changing events.
Item 1. BUSINESS OVERVIEW AVITA Medical is a leading therapeutic acute wound care company delivering transformative solutions designed to optimize wound healing, accelerate patient recovery, and improve clinical and economic outcomes across the continuum of acute wound management.
To build on preclinical success and develop clinical data in support of the commercial launch, we plan to conduct a post-market clinical study in early 2025 to demonstrate Cohealyx’s performance in real-world settings, focusing on clinical efficacy, time-to-graft reduction, and the associated cost savings in the treatment of full-thickness wounds and burns.
To further develop clinical data, we are conducting a post-market clinical study of 40 patients to demonstrate Cohealyx’s performance in real-world settings, focusing on time-to-graft reduction in the treatment of full-thickness wounds and burns. PermeaDerm PermeaDerm is a biosynthetic wound matrix that we manufacture, and exclusively market and distribute in the U.S., under multi-year agreements with Stedical.
PermeaDerm is FDA-cleared for the treatment of a variety of wound types and sizes until healing is achieved. Its transparent structure helps clinicians monitor the wound without frequent dressing changes.
It is FDA-cleared for the treatment of a variety of wound types and sizes until healing is achieved. PermeaDerm has three key attributes: (i) transparency, allowing clinicians to monitor wounds without frequent dressing changes; (ii) variable porosity, allowing clinicians to customize moisture management; and (iii) flexibility and adherency, allowing applications across a wide variety of wound presentations, including articulating joints.
For physicians, as well as in outpatient and ambulatory surgical center (“ASC”) settings, new Category I Current Procedural Terminology (“CPT”) codes (15011–15018), effective January 1, 2025, have been introduced to describe Skin Cell Suspension Autograft (“SCSA”) procedures performed with the RECELL System. These codes replace previously utilized codes and facilitate standardized billing for healthcare providers.
On January 1, 2025, new Category I CPT codes (15011–15018) became effective to describe Skin Cell Suspension Autograft (“SCSA”) procedures performed using RECELL, replacing prior coding constructs and enabling standardized billing for healthcare providers.
We developed a budget impact model showing that, in a burn center with 200 patients, treatment using RECELL reduces annual total treatment costs from approximately $39.4 million to $32.6 million, saving 17% or approximately $6.8 million per year compared to conventional autografting alone.
Budget impact modeling developed by the Company further indicates that, in a representative burn center treating approximately 200 patients annually, adoption of RECELL could reduce total annual treatment costs by approximately 17% compared to conventional autografting alone.
However, donor-site creation in a STSG, or autograft, procedure is associated with significant pain, risk of infection, scarring, delayed healing, and increased healthcare costs. The clinical benefits of closing wounds quickly are well recognized and include increased survival, shorter hospital stays, decreased pain duration, and reduced infection-related complications.
Second- and third-degree burns often require autologous split-thickness skin grafts (“STSGs”) to achieve definitive closure of the burn wound. However, donor-site creation in a STSG, or autograft, procedure is associated with significant pain, risk of infection, scarring, delayed healing, and increased healthcare costs.
AVITA Medical serves the U.S. burn market by shipping the RECELL System directly from our Ventura facility to customers. From time-to-time we may also store small quantities of the RECELL System at satellite distribution sites within the U.S. to better support access of the RECELL System to our U.S. customers.
From time-to-time we may also store small quantities of products at satellite distribution sites within the U.S. to better support access to our U.S. customers. BARDA CONTRACT BARDA, under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services (“HHS”) has supported our company since 2015.
As of December 31, 2024, 99% of our workforce was based in the United States (“United States or “U.S.”), with a significant number of our management and professional employees having prior experience with leading medical device, biotech, or pharmaceutical companies. None of our employees are covered by collective bargaining agreements.
This organization covers both burns and full-thickness skin defects. HUMAN CAPITAL As of December 31, 2025, we employed approximately 226 full-time and part-time employees, the majority of whom are based in the U.S. A significant number of our management and professional employees have prior experience with leading medical device, biotech, or pharmaceutical companies.
In the U.S., the RECELL System is reimbursed through established mechanisms for both inpatient and outpatient care. For inpatient treatments, hospitals receive payments based on the Medicare Severity Diagnosis-Related Group (“MS-DRG”) system, which classifies hospital stays by diagnosis and procedures performed.
In the inpatient setting, hospitals receive payment under the Medicare Severity Diagnosis-Related Group (“MS-DRG”) system, which classifies hospital stays by diagnosis and procedures performed. For physicians, as well as in outpatient and ambulatory surgical center (“ASC”) settings, Current Procedural Terminology ("CPT") codes are used to describe procedures and support billing.
We also believe that our current portfolio products (PermeaDerm and Cohealyx), as well as future portfolio products, will enhance these advantages.
However, based on our clinical trials and commercial experience, we believe that RECELL offers sustainable competitive, clinical, and economic advantages over the traditional surgical procedure. We also believe that our current portfolio products (Cohealyx and PermeaDerm)l enhance these advantages.
A single RPK can treat areas up to 1,920 cm 2 . • RECELL GO mini Autologous Cell Harvesting Device (“RECELL GO mini”): RECELL GO mini is a line extension of the RECELL GO system, designed specifically to treat smaller wounds up to 480 cm 2 .
A single RPK can treat wounds up to 1,920 cm 2 .
Surgical resections and excisions for cancer are procedures used to remove and treat various skin cancers. In the U.S., we estimate there are approximately 136,000 annual procedures that are eligible for treatment with RECELL.
In the U.S., we estimate that approximately 272,000 procedures annually may be eligible for treatment with RECELL across traumatic injuries, surgical wounds, and cancer-related resections. This indication materially expands our addressable market and allows us to leverage our existing commercial infrastructure and clinical relationships.
Removed
Our offerings currently include our core technology platform, RECELL ® (“RECELL”), as well as PermeaDerm ® and Cohealyx ™ , each designed to target acute wound care needs.
Added
Our technologies address critical healing needs arising from burns, traumatic injuries and surgical repairs, through a portfolio of proprietary and complementary products that support wound bed preparation, definitive closure, and recovery.
Removed
While RECELL remains the cornerstone of our portfolio, we strategically expanded our product offerings in 2024 by adding products complementary to RECELL. These new products address a wider range of clinical needs in acute wound care, enhancing our ability to reach more patients globally, ultimately improving their healing outcomes.
Added
Our current commercial portfolio includes RECELL ® (“RECELL”), and two complementary wound care products, PermeaDerm ® and Cohealyx ™ , which together support a comprehensive standard of care for acute wounds.
Removed
RECELL harnesses the regenerative properties of a patient’s own skin to create an autologous skin cell suspension, Spray-On Skin ™ Cells, delivering a transformative solution at the point of care. This breakthrough technology serves as the catalyst for a new treatment paradigm enabling improved clinical outcomes.
Added
In 2020, the Company redomiciled to the U.S. (the “Redomiciliation”).
Removed
This suspension is prepared at the point of care in as little as 30 minutes and includes the patient's own skin cells, keratinocytes, fibroblasts, and melanocytes, all critical to acute wound healing and repigmentation through the wound bed.
Added
Our strategy is to build a comprehensive portfolio that addresses wound management from initial coverage and wound bed preparation through definitive closure and healing, while leveraging a single commercial infrastructure focused on burn, trauma and surgical centers.
Removed
The patented and proprietary platform technology underlying the Spray-On Skin Cells originated in Australia, based on the seminal work of Professor Fiona Wood and fellow scientist Marie Stoner.
Added
The suspension contains key skin cell populations, including keratinocytes, fibroblasts, and melanocytes, which are critical to regenerative wound healing and pigment restoration. The technology underlying RECELL was invented in Australia, by the pioneering work of Professor Fiona Wood and fellow scientist Marie Stoner.
Removed
Device Evolution Since its initial introduction, we have continued to refine and expand the RECELL technology to meet a range of clinical and workflow needs, culminating in multiple device configurations for different wound sizes.
Added
Device Evolution We continue to refine and expand the RECELL technology to meet a range of clinical and workflow needs; including automating key steps in some RECELL procedures, and adopting the technology to efficiently treat a range of different wound sizes: • RECELL Autologous Cell Harvesting Device (“RECELL 1920”): A single-use, stand-alone, battery operated device capable of treating wounds up to 1,920 cm 2 . • RECELL Autologous Cell Harvesting Device with Ease-of-Use (“RECELL Ease-of-Use” or “RECELL EOU”): An enhanced, single-use device designed to improve workflow efficiency while maintaining treatment capacity up to 1,920 cm². • RECELL GO ® Autologous Cell Harvesting Device (“RECELL GO”): A next-generation system consisting of a reusable, AC-powered RECELL Processing Device (“RPD”) and a single-use preparation kit (“RPK”).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe are an emerging growth company, and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors. • We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, and as such, have taken advantage of certain exemptions and relief from various U.S. reporting requirements that are applicable to other public companies that are not emerging growth companies, including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) having the option of delaying the adoption of certain new or revised financial accounting standards, (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (iv) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Biggest changeFor as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, and (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
In some foreign jurisdictions, including the EU and the individual jurisdictions within it, the government largely controls pricing of medical products. In other countries, coverage negotiations must occur at the regional or hospital level. And pricing negotiations can take considerable time after the receipt of marketing approval for a medical product.
In some foreign jurisdictions, including the EU and the individual jurisdictions within it, the government largely controls pricing of medical products. In other countries, coverage negotiations must occur at the regional or hospital level. Pricing negotiations can take considerable time after the receipt of marketing approval for a medical product.
For example, we presently benefit from various reimbursement codes, including the following: • Medicare Severity Diagnosis-Related Groups (“MS-DRGs”), for hospitals with inpatient services. • Specific International Classification of Disease, 10th revision, Procedure Classification System (“ICD-10-PCS”) code series describing our “cell suspension technique” for the use of the RECELL System. • CPT codes that describe “skin cell suspension autograft to support physician reimbursement by professional healthcare services and for facility services at ambulatory surgical centers (“ASCs”), and Ambulatory Payment Classifications (“APCs”) for hospital reimbursement for outpatient department services.
For example, we presently benefit from various reimbursement codes, including the following: • Medicare Severity Diagnosis-Related Groups (“MS-DRGs”), for hospitals with inpatient services. • Specific International Classification of Disease, 10th revision, Procedure Classification System (“ICD-10-PCS”) code series describing our “cell suspension technique” for the use of RECELL. • CPT codes that describe “skin cell suspension autograft to support physician reimbursement by professional healthcare services and for facility services at ambulatory surgical centers (“ASCs”), and Ambulatory Payment Classifications (“APCs”) for hospital reimbursement for outpatient department services.
Our business is highly dependent on the PMA we received in September 2018 from the FDA, including subsequent PMA supplement approvals for acute wound indications. This PMA allows us to sell our RECELL and RECELL GO in the United States, our current primary market.
Our business is highly dependent on the PMA we received in September 2018 from the FDA, including subsequent PMA supplement approvals for acute wound indications. This PMA allows us to sell RECELL and RECELL GO in the United States, our current primary market.
Events that may prevent successful or timely commencement, enrollment or completion of a clinical study or a regulatory application include: • delays in raising, or inability to raise, sufficient capital to fund the planned trials; • delays in reaching a consensus with regulatory agencies on trial design; • changes in trial design; • inability to identify, recruit, and train suitable clinical investigators; • inability to add new clinical trial sites; 15 • delays in reaching agreement on acceptable terms for the performance of the trials with prospective clinical research organizations and clinical trial sites; • delays in recruiting suitable clinical sites and patients (i.e., subjects) to participate in clinical trials; • imposition of a clinical hold by regulatory agencies for any reason, including negative clinical results, safety concerns or as a result of an inspection of manufacturing or clinical operations or trial sites; • failure by any relevant parties to adhere to clinical trial requirements; • failure to perform in accordance with the FDA’s Good Clinical Practice (“GCPs”), or applicable regulatory guidelines in other countries; • delays in the testing, validation, manufacturing, and delivery to the clinical sites of the product candidates; • delays caused by clinical trial sites not completing a trial; • failure to demonstrate adequate effectiveness; • occurrence of serious adverse events in clinical trials associated with the product candidates that are viewed to outweigh its potential benefits; • changes in regulatory requirements or guidance that require amending or submitting new clinical protocols; • adverse events, safety issues, product recalls, manufacturing or supply chain interruptions, or poor clinical outcomes where the RECELL System is being used commercially; and • disagreements with regulatory agencies in the interpretation of the data from our clinical trials.
Events that may prevent successful or timely commencement, enrollment or completion of a clinical study or a regulatory application include: • delays in raising, or inability to raise, sufficient capital to fund the planned trials; • delays in reaching a consensus with regulatory agencies on trial design; • changes in trial design; • inability to identify, recruit, and train suitable clinical investigators; • inability to add new clinical trial sites; • delays in reaching agreement on acceptable terms for the performance of the trials with prospective clinical research organizations and clinical trial sites; • delays in recruiting suitable clinical sites and patients (i.e., subjects) to participate in clinical trials; • imposition of a clinical hold by regulatory agencies for any reason, including negative clinical results, safety concerns or as a result of an inspection of manufacturing or clinical operations or trial sites; • failure by any relevant parties to adhere to clinical trial requirements; • failure to perform in accordance with the FDA’s Good Clinical Practice (“GCPs”), or applicable regulatory guidelines in other countries; • delays in the testing, validation, manufacturing, and delivery to the clinical sites of the product candidates; • delays caused by clinical trial sites not completing a trial; • failure to demonstrate adequate effectiveness; • occurrence of serious adverse events in clinical trials associated with the product candidates that are viewed to outweigh its potential benefits; • changes in regulatory requirements or guidance that require amending or submitting new clinical protocols; 14 • adverse events, safety issues, product recalls, manufacturing or supply chain interruptions, or poor clinical outcomes where RECELL is being used commercially; and • disagreements with regulatory agencies in the interpretation of the data from our clinical trials.
If any of our IT systems were to be disrupted or fail, our business could suffer irreparable harm, including financial loss, adverse impact to our operations, and reputational damage. 18 A cyber security incident could be disruptive to our business, compromise confidential data, cause reputation harm, and subject us to litigation and federal and state governmental inquiries.
If any of our IT systems were to be disrupted or fail, our business could suffer irreparable harm, including financial loss, adverse impact to our operations, and reputational damage. A cyber security incident could be disruptive to our business, compromise confidential data, cause reputation harm, and subject us to litigation and federal and state governmental inquiries.
The restrictions and covenants in the Credit Agreement may also prevent us from taking actions that we believe would be in the best interests of our business, and may make it difficult for us to successfully execute our business strategy or effectively compete with companies that are not similarly restricted.
The restrictions and covenants in the Perceptive Credit Agreement may also prevent us from taking actions that we believe would be in the best interests of our business, and may make it difficult for us to successfully execute our business strategy or effectively compete with companies that are not similarly restricted.
As part of such review, the FDA may request additional information, at which time the product may become temporarily unavailable. We are highly dependent on our regulatory approval in the United States and failure to maintain that approval would materially impact our business and prospects.
As part of such review, the FDA may request additional information, at which time the product may become temporarily unavailable. 15 We are highly dependent on our regulatory approval in the United States and failure to maintain that approval would materially impact our business and prospects.
If we are not in compliance with these laws, we may be subject to criminal and civil penalties, disgorgement, and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations, and liquidity.
If we are not in compliance with these laws, we may be subject to civil and/or criminal and penalties, disgorgement, and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations, and liquidity.
As such, those funds in bank deposit accounts in excess of the standard FDIC insurance limits are uninsured and subject to the risk of bank failure. 25 Currently, we have full access to all funds in deposit accounts or other money management arrangements.
As such, those funds in bank deposit accounts in excess of the standard FDIC insurance limits are uninsured and subject to the risk of bank failure. Currently, we have full access to all funds in deposit accounts or other money management arrangements.
Future adverse developments with respect to specific financial institutions or the broader financial services industry may also lead to market-wide liquidity shortages. If we fail to manage our growth effectively, our business could be disrupted.
Future adverse developments with respect to specific financial institutions or the broader financial services industry may also lead to market-wide liquidity shortages. 25 If we fail to manage our growth effectively, our business could be disrupted.
In addition to ASX Listing Rule 7.1, we are also subject to Nasdaq Listing Rule 5635(d), commonly referred to as the Nasdaq 20% Rule, which requires stockholder approval of a transaction other than a public offering involving the sale, issuance, or potential issuance by a company of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock, or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the shares.
In addition to ASX Listing Rule 7.1, we are also subject to Nasdaq Listing Rule 5635(d), commonly referred to as the “Nasdaq 20% Rule”, which requires stockholder approval of a transaction other than a public offering involving the sale, issuance, or potential issuance by a company of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock, or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the shares.
And any breach by the Company of covenants and restrictions in such agreements could result in a default under the Credit Agreement, which could result in an acceleration of the repayment of our indebtedness.
And any breach by the Company of covenants and restrictions in such agreements could result in a default under the Perceptive Credit Agreement, which could result in an acceleration of the repayment of our indebtedness.
The medical device, biotechnology and pharmaceutical industries, specifically relating to the areas where we currently or intend to market our RECELL System, are intensely competitive and subject to significant changes due to technology and medical practice standards. We may face competition from any number of different sources with respect to any products we develop and commercialize.
The medical device, biotechnology and pharmaceutical industries, specifically relating to the areas where we currently or intend to market our products, are intensely competitive and subject to significant changes due to technology and medical practice standards. We may face competition from any number of different sources with respect to any products we develop and commercialize.
We may find it difficult to protect our intellectual property rights throughout the world. Filing, prosecuting and defending patents on all of our technologies and products in every jurisdiction is expensive. Competitors could reverse engineer our technologies in jurisdictions where we have not obtained patent protection to develop their own products.
We may find it difficult to protect our intellectual property rights throughout the world. Filing, prosecuting and enforcing patents on all of our technologies and products in every jurisdiction is expensive. Competitors could reverse engineer our technologies in jurisdictions where we have not obtained patent protection to develop their own products.
For example, even though the FDA has granted marketing approval for use of our RECELL System for the treatment of full-thickness skin defects and vitiligo, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing, and promotion of the product in those jurisdictions if not currently approved.
For example, even though the FDA has granted marketing approval for use of RECELL in the treatment of full-thickness skin defects and vitiligo, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing, and promotion of the product in those jurisdictions if not currently approved.
Further, the validity and enforceability of our patent portfolio cannot be predicated with certainty. We will rely on patents to protect a significant part of our intellectual property and to enhance our competitive position. However, our presently pending or future patent applications may be denied, and any patent previously issued to us may be challenged, invalidated, held unenforceable or circumvented.
Further, the validity and enforceability of our patent portfolio cannot be predicted with certainty. We rely on patents to protect a significant part of our intellectual property and to enhance our competitive position. However, our presently pending or future patent applications may be denied, and any patent previously issued to us may be challenged, invalidated, held unenforceable or circumvented.
We have a manufacturing facility located in Ventura, California where we produce, package, and warehouse the RECELL System. We also rely on global third-party manufacturers for production of some of the components used in the RECELL System.
We have a manufacturing facility located in Ventura, California where we produce, package, and warehouse RECELL and PermeaDerm. We also rely on global third-party manufacturers for production of some of the components used in RECELL.
These companies compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies necessary for, or complementary to, our programs. 19 If we are unable to effectively protect our intellectual property, we may not be able to operate our business and third parties may be able to use and profit from our technology, both of which would impair our ability to be competitive.
These companies compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies necessary for, or complementary to, our products. 18 If we are unable to effectively protect our intellectual property, we may not be able to operate our business and third parties may be able to use and profit from our technology, both of which would impair our ability to be competitive.
If we were to violate the Nasdaq 20% rule, the Company would be subject to delisting from Nasdaq and share prices and trading volumes would likely suffer. There has been relatively limited trading volume in the markets for our common stock and CDIs, and more active, liquid trading markets for such securities may never develop.
If we were to violate the “Nasdaq 20% Rule”, the Company would be subject to delisting from Nasdaq and share prices and trading volumes would likely suffer. There has been relatively limited trading volume in the markets for our common stock and CDIs, and more active, liquid trading markets for such securities may never develop.
In addition, process deviations or unanticipated effects of approved process changes may result in production runs of our RECELL System not complying with stability requirements or specifications. The occurrence or suspected occurrence of production and distribution difficulties can lead to lost inventories and in some cases product recalls, with consequential reputational damage and the risk of product liability.
In addition, process deviations or unanticipated effects of approved process changes may result in production runs of our products not complying with stability requirements or specifications. The occurrence or suspected occurrence of production and distribution difficulties can lead to lost inventories and in some cases product recalls, with consequential reputational damage and the risk of product liability.
Continued sales of the RECELL System depend in part on the availability of coverage and reimbursement from third-party payers such as government insurance programs, including Medicare and Medicaid, private health insurers, health maintenance organizations and other healthcare-related organizations, who are increasingly challenging the price of medical device products and services.
Continued sales of our products depend in part on the availability of coverage and reimbursement from third-party payers such as government insurance programs, including Medicare and Medicaid, private health insurers, health maintenance organizations and other healthcare-related organizations, who are increasingly challenging the price of medical device products and services.
Risks Related to Our Business Operations We have experienced significant losses, expect losses to continue for the foreseeable future and may never achieve or maintain profitability. Although we have begun full scale marketing and sales of our RECELL ® System in the United States and other jurisdictions, we have not yet achieved profitability.
Risks Related to Our Business Operations We have experienced significant losses, expect losses to continue for the foreseeable future and may never achieve or maintain profitability. Although we have begun full scale marketing and sales of our products in the United States and other jurisdictions, we have not yet achieved profitability.
These lawsuits are expensive and would distract our key personnel and consume time and other resources, even if we were successful in stopping the infringement of these patents.
These lawsuits or proceedings are expensive and would distract our key personnel and consume time and other resources, even if we were successful in stopping the infringement of these patents.
If we are unable to promptly obtain coverage and profitable payment rates from hospital budgets, as well as from either government-funded or private purchasers, for the RECELL System or any future products, this could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products, and our overall financial condition.
If we are unable to promptly obtain coverage and profitable payment rates from hospital budgets, as well as from either government-funded or private purchasers, for our current products or any future products, this could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products, and our overall financial condition.
If we are not able to successfully complete clinical trials or are not able to do so in a timely and cost-effective manner, we will not be able to obtain regulatory approval for the use of our RECELL System for additional applications, all of which could have a material adverse effect on our business, financial condition, or results of operations.
If we are not able to successfully complete clinical trials or are not able to do so in a timely and cost-effective manner, we will not be able to obtain regulatory approval for the use of our products for additional applications or indications, all of which could have a material adverse effect on our business, financial condition, or results of operations.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products, treatments or procedures that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than our RECELL System or any future products we develop.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products, treatments or procedures that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than our current products or any future products we develop.
However, we will require additional clinical data or approvals from regulatory authorities within these jurisdictions to market improved versions of RECELL for the same or additional indications, and from any other jurisdictions in which we seek to market the product. This process can be time-consuming and complicated, and may result in unanticipated delays or fail altogether.
We may require additional clinical data or approvals from regulatory authorities within the jurisdictions in which we operate to market improved versions of RECELL for the same or additional indications, and from any other jurisdictions in which we seek to market the product. This process can be time-consuming and complicated, and may result in unanticipated delays or fail altogether.
We may be unsuccessful in commercializing our RECELL System or other future products due to unfavorable pricing regulations or third-party coverage or reimbursement policies. We cannot guarantee that we will receive favorable pricing or reimbursement for use of our products.
We may be unsuccessful in commercializing our current products or other future products due to unfavorable pricing regulations or third-party coverage or reimbursement policies. We cannot guarantee that we will receive favorable pricing or reimbursement for use of our products.
As a result, we may not achieve the expected clinical milestones necessary for approval by the FDA, or other regulators, for the use of our RECELL System for additional applications in the United States or other countries. A failure in a clinical study or regulatory application can occur at any stage.
As a result, we may not achieve the expected clinical milestones necessary for approval by the FDA, or other regulators, for the use of our products for additional applications or indications in the United States or other countries. A failure in a clinical study or regulatory application can occur at any stage.
If we choose to go to court to stop someone else from using the intellectual property claimed in our patents or our licensed patents, that individual or company has the right to ask the court to rule that these patents are invalid and/or should not be enforced against that third party.
If we choose to go to court to stop someone else from using the intellectual property claimed in our patents, that individual or company has the right to ask a patent office or a court to rule that these patents are invalid and/or should not be enforced against that third party.
The continued successful commercialization of the RECELL System for FDA approved and pending indications, will depend in part on the extent to which government authorities and healthcare insurers establish adequate reimbursement levels and pricing policies.
The continued successful commercialization of our products for FDA approved and pending indications, will depend in part on the extent to which government authorities and healthcare insurers establish adequate reimbursement levels and pricing policies.
Any denial of private or government payer coverage, such as the Affordable Care Act or the IRA, as well as other federal, state, and foreign healthcare reform measures that have been and may be adopted in the future, or inadequate reimbursement, could reduce our revenue and business prospects.
Any denial of private or government payer coverage, as well as other federal, state, and foreign healthcare reform measures that have been and may be adopted in the future, or inadequate reimbursement, could reduce our revenue and business prospects.
Macroeconomic and Social Risks Adverse changes in general economic conditions or uncertainty about future economic conditions, could adversely affect us. We are subject to the risks arising from adverse changes in general economic market conditions. Uncertainty about future economic conditions could negatively affect our current and prospective customers causing them to delay the purchase of our products.
We are subject to the risks arising from adverse changes in general economic market conditions. Uncertainty about future economic conditions could negatively affect our current and prospective customers causing them to delay the purchase of our products.
A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation; in addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil FCA. • False Claims Act : the federal false claims laws including the civil False Claims Act, which can be enforced through civil whistleblower or qui tam actions, and civil monetary penalties laws, which impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or knowingly making, or causing to be made, a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; in addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. • Data/Privacy Protection : a number of federal, state and foreign laws, regulations, guidance and standards that impose requirements regarding the protection of consumer information that are applicable to or affect our operations. • Physician Payment Sunshine Act : the federal transparency requirements regarding payments in the healthcare industry, sometimes referred to as the “Sunshine Act,” require certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under federal government healthcare programs, to report annually to CMS information related to payments or other "transfers of value" made to HCPs and nurse practitioners. • Anti-Corruption Laws : Our operations are subject to anti-corruption laws, including laws combating foreign bribery in Australia and the FCPA in the U.S., and other anti-corruption laws that apply in countries where we do business.
A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation; in addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil FCA. • False Claims Act : the federal false claims laws including the civil False Claims Act, which can be enforced through civil whistleblower or qui tam actions, and civil monetary penalties laws, which impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or knowingly making, or causing to be made, a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; in addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. • Data/Privacy Protection : a number of federal, state and foreign laws, regulations, guidance and standards that impose requirements regarding the protection of consumer information that are applicable to or affect our operations. • Physician Payment Sunshine Act : the federal transparency requirements regarding payments in the healthcare industry, sometimes referred to as the “Sunshine Act,” require certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under federal government healthcare programs, to report annually to CMS information related to payments or other "transfers of value" made to HCPs and nurse practitioners. • Anti-Corruption Laws : anti-corruption laws in the U.S. and in other countries where we do business generally prohibit us and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage.
If we cannot attract and retain skilled scientific and operational personnel for our research and development and manufacturing operations on acceptable terms, we may not be able to develop and commercialize our products. Further, any failure to effectively onboard and train new personnel could prevent us from successfully growing our company.
If we cannot attract and retain skilled scientific and operational personnel for our research and development and manufacturing operations on acceptable terms, we may not be able to develop and commercialize our products. Further, any failure to effectively onboard and train new personnel could prevent us from successfully growing our company. Item 1B. UNRESOLVE D STAFF COMMENTS None
We face risks related to the protection of information that we maintain—or engage a third-party to maintain on our behalf—including unauthorized access, acquisition, use, disclosure, or modification of such information. Cyberattacks are increasing in their frequency, sophistication, and intensity and have become increasingly difficult to detect.
We face risks related to the disruption of the confidentiality, integrity, and availability of our IT systems and the information that we maintain—or engage a third-party to maintain on our behalf—including unauthorized access, acquisition, use, disclosure, or modification of such information. Cyberattacks are increasing in their frequency, sophistication, and intensity and have become increasingly difficult to detect.
Further, such pricing limitations may hinder our ability to recoup our total investment in our RECELL System or other future products.
Further, such pricing limitations may hinder our ability to recoup our total investment in our current products or other future products.
Any determination to pay dividends in the future on our common stock and CDIs will be made at the discretion of our Board of Directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law, capital requirements, and other factors that our Board of Directors deems relevant.
Any determination to pay dividends in the future on our common stock and CDIs will be made at the discretion of our board of directors (the “Board of Directors” or the “Board” and each director, a “Director”) and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law, capital requirements, and other factors that our Board of Directors deems relevant.
The costs incurred to remediate any security incident could be substantial. In addition, we cannot assure you that any of our third-party service providers with access to our sensitive or confidential information, or to that of our customers and/or employees, will not experience security breaches or attempts thereof, which could have a corresponding effect on our business.
In addition, we cannot assure that any of our third-party service providers with access to our sensitive or confidential information, or to that of our customers and/or employees, will not experience security breaches or attempts thereof, which could have a corresponding effect on our business.
We are also subject to other risks relating to our manufacturing capabilities, including: • quality levels and reliability of components, sub-assemblies, and materials that we source from third-party suppliers, who are required to meet our quality specifications, some of whom are our single-source suppliers for the products they supply; • failure to secure raw materials, components, and materials in a timely manner, in sufficient quantities or on commercially reasonable terms; • inability to secure raw materials, components, and materials of sufficient quality to meet the exacting needs of medical device manufacturing; • inability to increase production capacity or volumes to meet demand.
We are also subject to other risks relating to our manufacturing capabilities, including: • quality levels and reliability of components, sub-assemblies, and materials that we source from third-party suppliers, who are required to meet our quality specifications, some of whom are our single-source suppliers for the products they supply; • failure to secure raw materials, components, and materials in a timely manner, in sufficient quantities or on commercially reasonable terms; • inability to secure raw materials, components, and materials of sufficient quality to meet the exacting needs of medical device manufacturing; • inability to increase production capacity or volumes to meet demand. 16 As demand for our products increases, we will have to invest additional resources to purchase raw materials and components, sub-assemblies, and materials, hire and train employees, and enhance our manufacturing processes.
In addition, any security breach or attempt thereof could result in liability for stolen assets or information, additional costs associated with repairing any system damage, incentives offered to clients or other business partners to maintain business relationships after a breach, and implementation of measures to prevent future breaches, including organizational changes, deployment of additional personnel and protection technologies, increased employee training, and engagement of third-party experts and consultants.
In addition, any security breach or attempt thereof could result in liability for stolen assets or information, additional costs associated with repairing any system damage, and implementation of measures to prevent future breaches, including organizational changes, deployment of additional personnel and protection technologies, increased employee training, and engagement of third-party experts and consultants.
We expect to make significant investments to facilitate our future growth through, among other things: • new product development; • commercial development of our RECELL System to include full-thickness skin defects; • clinical trials for additional indications; and • funding of our marketing and sales infrastructure.
We expect to make significant investments to facilitate our future growth through, among other things: • new product development; • increasing the use of RECELL in the treatment of full-thickness skin defects; • clinical trials for additional indications; and • funding of our marketing and sales infrastructure.
We had a total net loss of $61.8 million and $35.4 million for the year ended December 31, 2024 and December 31, 2023, respectively. We have incurred a cumulative deficit of $359.8 million through December 31, 2024. We anticipate that we may continue to incur losses at least until sales of the RECELL System are adequate to fund operating expenses.
We had a total net loss of $48.6 million and $61.8 million for the year ended December 31, 2025 and 2024, respectively. We have incurred a cumulative deficit of $408.4 million through December 31, 2025. We anticipate that we may continue to incur losses at least until sales of our products are adequate to fund operating expenses.
In addition, there is a risk that a court will decide that our patents are invalid or unenforceable and that we do not have the right to stop the other party from using the inventions or, even if the validity or enforceability of these patents is upheld, the court may refuse to stop the other party because the competitors’ activities do not infringe our rights. 20 We could be subject to product liability lawsuits, which could result in costly and time-consuming litigation and significant liabilities.
In addition, there is a risk that a patent office or a court will decide that our patents are invalid or unenforceable and that we do not have the right to stop the other party from using the inventions or, even if the validity or enforceability of these patents is upheld, the court may refuse to stop the other party because the competitors’ activities do not infringe our rights.
Due to the cost and regulatory requirements associated with qualifying multiple suppliers, in 2023, we single-sourced some of our material components. To the extent that any of these single-sourced suppliers experience disruptions in deliveries due to production, quality, or other issues, we are potentially subject to similar production delays or unfavorable cost increases.
To the extent that any of these single-sourced suppliers experience disruptions in deliveries due to production, quality, or other issues, we are potentially subject to similar production delays or unfavorable cost increases.
We collect and store sensitive business and other information, including intellectual property and trade secrets, on our networks. Our business operations are dependent upon the secure maintenance of this information.
We collect and store sensitive business and other information, such as sensitive intellectual property, on our IT systems. Our business operations are dependent upon the secure maintenance of these IT systems and this information.
We may not be able to obtain these licenses at a reasonable cost, if at all. Defense of any lawsuit or failure to obtain any of these licenses could prevent us from commercializing available products and have a material negative effect on our financial condition and business prospects.
Defense of any lawsuit or failure to obtain any of these licenses could prevent us from commercializing available products and have a material adverse effect on our financial condition and business prospects.
Before marketing authorization is granted, regulatory authorities may require the inspection of the manufacturing facility and quality systems (including those of third parties) at which the product candidate is manufactured and tested, as well as potential audits of the non-clinical and clinical trial sites that generated the data cited in the marketing authorization application. 16 We cannot predict whether any additional marketing authorizations will ultimately be granted or how long the applicable regulatory authority or agency approval processes will take.
Before marketing authorization is granted, regulatory authorities may require the inspection of the manufacturing facility and quality systems (including those of third parties) at which the product candidate is manufactured and tested, as well as potential audits of the non-clinical and clinical trial sites that generated the data cited in the marketing authorization application.
Pursuant to the Credit Agreement that we entered with OrbiMed Advisors, LLC (as amended, the “Credit Agreement”) on October 18, 2023, most recently amended in the Credit Agreement’s Third Amendment, on November 7, 2024 (the “Third Amendment”), we incurred $40.0 million of indebtedness secured by substantially all of our assets.
We had previously entered into a credit agreement with OrbiMed Advisors, LLC (as amended, the “Previous Credit Agreement”) on October 18, 2023, most recently amended in the Previous Credit Agreement’s Sixth Amendment, on November 5, 2025 (the “Sixth Amendment”) and incurred $40.0 million of indebtedness secured by substantially all of our assets.
We may require additional financing in the future to continue the development and commercialization of our RECELL System or any future products, which may cause dilution to our existing stockholders.
We may require additional financing in the future to continue the development and commercialization of our current and future products, which may cause dilution to our existing stockholders. If additional financing is not available, we may have to postpone, reduce or cease operations.
If additional financing is not available, we may have to postpone, reduce or cease operations. 13 If we are unable to achieve profitability sufficient to permit us to fund our operations, repay indebtedness in accordance with the Credit Agreement, and take other planned actions, we may be required to raise additional capital.
If we are unable to achieve profitability sufficient to permit us to fund our operations, repay indebtedness in accordance with the Perceptive Credit Agreement, and take other planned actions, we may be required to raise additional capital. There can be no assurance that such capital would be available on favorable terms, or available at all.
Nevertheless, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with applicable protocol, legal, regulatory, and scientific standards, and our reliance on CROs does not relieve us of our such responsibilities.
Nevertheless, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with applicable protocol, legal, regulatory, and scientific standards, and our reliance on CROs does not relieve us of our such responsibilities. 13 We and our CROs are required to comply with the FDA’s GCPs for conducting, recording, and reporting the results of clinical trials to assure that the data and reported results are credible and accurate and that the rights, integrity, and confidentiality of clinical trial participants are protected.
Continued federal and state proposals and healthcare reforms are likely, which could limit the prices that can be charged for the RECELL System and may further limit our commercial opportunity.
Continued federal and state proposals and healthcare reforms are likely, which could limit the prices that can be charged for our products and may further limit our commercial opportunity. While many of these initiatives are focused on pharmaceuticals, these measures may impact our products, or analogous measures may be introduced that target our products.
There can be no guarantee that the above reimbursement codes will not be withdrawn, reduced, consolidated or otherwise altered in a manner which is not supportive of ongoing commercial use of the RECELL System. 14 Certain of our products are dependent on specialized sources of supply potentially subject to disruption which could have a material, adverse impact on our business.
There can be no guarantee that the above reimbursement codes will not be withdrawn, reduced, consolidated or otherwise altered in a manner which is not supportive of ongoing commercial use of RECELL.
The development of medical device products, such as our RECELL System, involves an inherent risk of product liability claims and associated financial liability and adverse publicity. Any products we may develop could be found to be harmful or to contain harmful substances and expose us to substantial liability and risk of litigation or may force us to discontinue production.
Any products we may develop could be found to be harmful or to contain harmful substances and expose us to substantial liability and risk of litigation or may force us to discontinue production.
Accordingly, we continue to evaluate the effect that the Affordable Care Act has on our business. There also may be future changes unrelated to the IRA that result in reductions in potential coverage and reimbursement levels for our products, and we cannot predict the scope of any future changes or the impact that those changes would have on our operations.
Such reductions are expected to decrease the number of persons enrolled in Medicaid and reduce the services covered by Medicaid, which could adversely affect our sales of our products. 20 There also may be future changes unrelated to the IRA that result in reductions in potential coverage and reimbursement levels for our products, and we cannot predict the scope of any future changes or the impact that those changes would have on our operations.
Our patents have expected expiration dates ranging from 2032 to 2033, while our pending patent applications, if granted, would have expiration dates ranging from 2034 to 2043. Furthermore, the patent protections we have been granted may not be broad enough to prevent competitors from producing products similar to ours.
Our patents have expected expiration dates ranging from 2032 to 2033, while our pending patent applications, if granted, would have expiration dates ranging from 2034 to 2043.
While we currently do not believe it to be the case, third parties may claim that we are employing their proprietary technology without authorization or that we are infringing on their patents. If such claims were made, we could incur substantial costs coupled with diversion of key technical personnel in defending against these claims.
While we currently do not believe it to be the case, third parties may claim that we are employing their proprietary technology without authorization or that we are infringing their patents. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit.
We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and we may be unable to protect our rights to, or use of, our technology.
We may fail to identify relevant third-party patents or patent applications, regardless of when filed, or we may incorrectly conclude that a third-party patent is invalid or not infringed by our products or activities. 19 We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and we may be unable to protect our rights to, or use of, our technology.
In the event our production efforts require a recall or result in an inventory loss, our operating results and financial condition may be adversely affected. 17 We face manufacturing risks that may adversely affect our ability to manufacture products and could reduce our gross margins and negatively affect our business and operating results.
We face manufacturing risks that may adversely affect our ability to manufacture products and could reduce our gross margins and negatively affect our business and operating results.
There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws or other laws including trade related laws.
These analogous laws may contain additional or different compliance requirements than listed above. There is no assurance that we will be completely effective in ensuring our compliance with all applicable laws.
These products may compete with our products and may not be covered by any patent claims or other intellectual property rights. The laws of some countries do not protect intellectual property rights to the same extent as the laws of the United States and many companies have encountered significant problems in protecting and defending such rights in foreign jurisdictions.
The laws of some countries do not protect intellectual property rights to the same extent as the laws of the United States and many companies have encountered significant problems in protecting and defending such rights in foreign jurisdictions. This lack of protection could make it difficult for us to stop third parties from infringing our patents.
The investigation and remediation of any identified problems can consume management resources and cause production delays, substantial expense, lost sales, and delays of new product launches.
The investigation and remediation of any identified problems can consume management resources and cause production delays, substantial expense, lost sales, and delays of new product launches. In the event our production efforts require a recall or result in an inventory loss, our operating results and financial condition may be adversely affected.
We are subject to diverse laws and regulations relating to data privacy and security, such as federal and state data protection regulations, including the California Consumer Privacy Act, as amended, and European data privacy laws, including the General Data Protection Regulation.
While we maintain insurance that covers certain security incidents, we may not carry appropriate insurance or maintain sufficient coverage to compensate for damage from all events and related potential liability. 17 We are subject to diverse laws and regulations relating to data privacy and security, such as federal and state data protection regulations, including the California Consumer Privacy Act, as amended, and European data privacy laws, including the General Data Protection Regulation.
Regulatory agencies, including the FDA, have substantial discretion in the approval process. In addition, the approval process and the requirements governing clinical trials vary from country to country.
We cannot predict whether any additional marketing authorizations will ultimately be granted or how long the applicable regulatory authority or agency approval processes will take. Regulatory agencies, including the FDA, have substantial discretion in the approval process. In addition, the approval process and the requirements governing clinical trials vary from country to country.
We also face risks associated with security breaches affecting third parties that conduct business with us or our customers and others who interact with our data. While we maintain insurance that covers certain security incidents, we may not carry appropriate insurance or maintain sufficient coverage to compensate for damage from all events and related potential liability.
We also face risks associated with security breaches affecting third parties that conduct business with us or our customers and others who interact with our data.
Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our financial condition and operations, as well as business prospects, may be impaired.
Therefore, even if we are successful in defending against any such allegations that may be brought against us, our financial condition and operations, as well as business prospects, may be impaired. Macroeconomic and Social Risks Adverse changes in general economic conditions or uncertainty about future economic conditions, could adversely affect us.
Likewise, any investigation of potential violations of these laws by respective government bodies could also have an adverse impact on our reputation, our business, financial condition, and results of operations. Item 1B. UNRESOLVE D STAFF COMMENTS None
Likewise, any investigation of potential violations of these laws by respective government bodies could also have an adverse impact on our reputation, as well as on our business, financial condition, and results of operations. Defending against any allegations that we have violated any such laws can be costly, time-consuming and may require significant financial and personnel resources.
If we are unable to generate sufficient cash flow to satisfy payment obligations under the Credit Agreement, we may be required to adopt one or more alternatives, such as obtaining additional equity capital on terms that may be onerous or highly dilutive.
In addition, if the Company’s net revenue does not equal or exceed a certain amount for upcoming fiscal periods as set forth in the Perceptive Credit Agreement, then the Company will be in default of the Perceptive Credit Agreement. _________________________________ [1] Additional details concerning the Perceptive Credit Agreement, the Security Agreement, and the Refinancing Transaction are provided in Item 7, infra. 12 If we are unable to generate sufficient cash flow to satisfy payment obligations under the Perceptive Credit Agreement, we may be required to adopt one or more alternatives, such as obtaining additional equity capital on terms that may be onerous or highly dilutive.
This lack of protection could make it difficult for us to stop the infringement of our patents. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert the efforts and attention of key personnel from other aspects of our business.
Proceedings to enforce our patent rights in the U.S. or foreign jurisdictions could result in substantial cost and divert the efforts and attention of key personnel from other aspects of our business. If we fail to obtain adequate patent protection for our proprietary technology, our ability to be commercially competitive internationally will be materially impaired.
Furthermore, parties making claims against us may be able to obtain injunctive or other equitable relief which could effectively halt our ability to further develop, commercialize, and sell products. In the event of a successful claim of infringement, courts may order us to pay damages and obtain one or more licenses from third parties.
In the event of a successful claim of infringement, courts may order us to pay damages and obtain one or more licenses from third parties. We may not be able to obtain these licenses at a reasonable cost, if at all.
Anti-corruption laws generally prohibit us and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. We participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under these anti-corruption laws.
We participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under these anti-corruption laws.
It is possible that some investors will find our common stock and CDIs less attractive as a result, which may result in a less active trading market for our common stock and CDIs, and higher volatility in our stock and CDI price.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline or be more volatile.
Removed
In addition, if the Company’s net revenue does not equal or exceed a certain amount for upcoming fiscal periods as set forth in the Credit Agreement, then the Company will be required to repay 5% of the outstanding principal amount of its indebtedness (along with interest accrued on that principal amount if not already paid) in equal quarterly installments, in addition to paying both a repayment fee and a prepayment fee with each quarterly installment.
Added
On January 13, 2026, we entered into a new Credit Agreement and Guaranty (the “Perceptive Credit Agreement”), and Security Agreement (the “Security Agreement”), by and among us, as borrower, Avita Medical Americas, LLC, a wholly-owned subsidiary of the Company, as guarantor (the “Guarantor,” taken together with the Company, the “Obligors”) and Perceptive Credit Holdings V, LP as a lender and the administrative agent (the “Lender,” and the “Administrative Agent,” as applicable).
Removed
There can be no assurance that such capital would be available on favorable terms, or available at all.
Added
The Perceptive Credit Agreement provides for a five-year senior secured credit facility in an aggregate principal amount of up to $60 million (the “Loan Facility”), of which (i) $50 million was funded on the Closing Date (the “Initial Commitment Amount”) and (ii) $10 million will be made available, at our discretion by notice to the Administrative Agent on or before March 31, 2027, subject to satisfaction of a certain net revenue requirement (the “Additional Commitment Amount”).
Removed
We and our CROs are required to comply with the FDA’s GCPs for conducting, recording, and reporting the results of clinical trials to assure that the data and reported results are credible and accurate and that the rights, integrity, and confidentiality of clinical trial participants are protected.
Added
On the Closing Date, we closed on the Initial Commitment Amount, less certain fees and expenses payable to or on behalf of the Lender. Simultaneously with the closing of the Initial Commitment Amount, we repaid in full and terminated all of obligations and commitments (other than previously issued warrants) (the “Refinancing Transaction”) [1] under the Previous Credit Agreement.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Audit Committee is briefed by our Chief Financial Officer on our cybersecurity ISMS program and the overall cybersecurity risk environment. The briefing may include discussions on topics such as: information security and technology risks, cybersecurity risk assessment process and updates, information risk management strategies, and progress on cybersecurity and data protection training initiatives for employees, among others.
Biggest changeThe briefing may include discussions on topics such as: information security and technology risks, information risk management strategies, cybersecurity risk assessment processes and updates, and updates on cybersecurity and data protection training initiatives for employees .
Additionally, we have a cybersecurity incident response plan in place that provides a documented framework for handling high and low severity security incidents and facilitates coordination across multiple parts of the business. Finally, cybersecurity is integrated into the Company’s training as all employees are required to take security awareness training.
Additionally, we have a cybersecurity incident response plan in place that provides a documented framework for handling high and low severity security incidents and facilitates coordination across multiple parts of the business. Finally, cybersecurity is integrated into the Company’s training as all employees are required to take monthly security awareness training .
Threat ratings created from the Impact and probability calculations will result with a value from 1- 9. a. Low (1 – 2.99) = Risk level acceptable and no further action deemed necessary b. Medium (2 – 5.99) and High (6 - 9) – implement risk management to reduce the risk to an acceptable level 5.
Threat ratings created from the Impact and probability calculations will result with a value from 1- 9. a. Low (1 – 2.99) = Risk level acceptable and no further action deemed necessary b. Medium (2 – 5.99) and High (6 - 9) – implement risk management to reduce the risk to an acceptable level 26 5.
Disclosure of the Board’s Responsibility While management is primarily responsible for assessing and managing cybersecurity risks on a day-to-day basis, the Company’s Board of Directors oversees management’s efforts to assess and manage risk. The Board of Directors (through the Audit Committee) monitors the cybersecurity risk assessment and response process.
Disclosure of the Board’s Responsibility While management is primarily responsible for assessing and managing cybersecurity risks on a day-to-day basis, the Company’s Board of Directors oversees management’s efforts to assess and manage such risks. The Board of Directors (through the Audit Committee) monitors the cybersecurity risk assessment and response process.
We also conduct internal phishing campaigns and perform an independent penetration test on an annual basis. In addition, we conduct regular security awareness training and testing of our employees. The Company has not had any material cybersecurity incidents. 26 All related activities ISMC activities have been structured into a framework consisting of: 1.
We also conduct internal phishing campaigns and perform an independent penetration test on an annual basis. In addition, we conduct regular security awareness training and testing of our employees. The Company has not had any material cybersecurity incidents. All related ISMS activities have been structured into a framework consisting of: 1.
We have protocols, policies and tools in place to mitigate cybersecurity risk. They also provide the administrative, technical, and physical safeguards to ensure the security, confidentiality, integrity and availability of confidential information and personal information from unauthorized access, use, disclosure, alteration, destruction or theft.
We have protocols, policies and tools in place to mitigate cybersecurity risk. These systems also provide the administrative, technical and physical safeguards to ensure the security, confidentiality, integrity and availability of confidential information and personal information from unauthorized access, use, disclosure, alteration, destruction or theft.
Added
The Audit Committee is briefed by our Chief Financial Officer on our cybersecurity ISMS program and the overall cybersecurity risk environment on at least an annual basis.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company also has an administrative office lease in Irvine, California of approximately 10,700 square feet that is currently leased through the end of July 2028. On January 1, 2024, we also began leasing a 3,400 square foot storage facility adjacent to our existing production plant in Ventura.
Biggest changeWe also lease a 3,360 square foot storage facility adjacent to our existing production plant in Ventura under a lease agreement that expires on September 30, 2030. The Company also has an administrative office lease in Irvine, California of approximately 10,700 square feet that is currently leased through the end of July 2028. We do not own any real property.
Item 2. PR OPERTIES Our principal corporate office is located at 28159 Avenue Stanford, Suite 220, Valencia, California 91355. We lease the 17,500 square foot facility under a lease agreement that expires on October 31, 2026.
Item 2. PR OPERTIES Our principal corporate office is located at 28159 Avenue Stanford, Suite 220, Valencia, California 91355. We lease the 17,500 square foot facility under a lease agreement that expires on October 31, 2026. Our production plant in Ventura, California is a 27,840 square foot facility that we lease through September 30, 2030.
We extended the lease through December 31, 2025 and have an option to extend the lease for an additional year through December 31, 2026. We do not own any real property. We believe that leased facilities are adequate to meet current needs and that additional facilities will, if required, be available for lease to meet future needs. 27
We believe that leased facilities are adequate to meet current needs and that additional facilities will, if required, be available for lease to meet future needs.
Removed
Our production plant in Ventura, California is a 27,480 square foot facility that we lease through September 30, 2027 with the right to extend the lease, at our sole option, up to an additional three years.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFrom time to time, as an operating business, we are involved in routine disputes (both formal and informal) with customers, manufacturing partners and employees. Item 4. MINE SAF ETY DISCLOSURES Not applicable. 28 PART II
Biggest changeFrom time to time, as an operating business, we are involved in routine disputes (both formal and informal) with customers, partners and employees. Item 4. MINE SAF ETY DISCLOSURES Not applicable. 27 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 28 PART II 29 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29 Item 6. [Reserved] 29 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 27 PART II 28 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28 Item 6. [Reserved] 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAny future dividend policy will be determined by our board of directors and will be based upon various factors, including our results of operations, financial condition, current and anticipated cash needs, future prospects, contractual restrictions and other factors as our board of directors may deem relevant.
Biggest changeAny future dividend policy will be determined by our Board and will be based upon various factors, including our results of operations, financial condition, current and anticipated cash needs, future prospects, contractual restrictions and other factors as our Board may deem relevant.
Holders As of January 27, 2025, the Company had approximately 4 unique stockholders of record of our common stock (which includes 19,321 holders of record of the Company’s CDIs, with each representing 1/5 of a share of common stock, and CHESS Depositary Nominees Pty Ltd, holds the legal title to all of the outstanding common stock underlying the CDIs of the Company).
Holders As of January 26, 2026, the Company had approximately 3 unique stockholders of record of our common stock (which includes 18,051 holders of record of the Company’s CDIs, with each representing 1/5 of a share of common stock, and CHESS Depositary Nominees Pty Ltd, holds the legal title to all of the outstanding common stock underlying the CDIs of the Company).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

58 edited+56 added−40 removed52 unchanged
Biggest changeOther income, net increased by $7.6 million in the current year primarily due to an increase of $2.1 million in income from our investment activities, wind down of certain foreign subsidiaries that resulted in a $9.4 million gain, partially offset by a loss on debt issuance of $1.2 million, debt issuance costs of $0.8 million and the change of fair value for our debt of $1.6 million and change in fair value of warrants for $0.7 million.
Biggest changeIn the current year, other expense, net consists of $3.3 million in debt issuance costs and $1.4 million related to the change in fair value of loan facility, offset by a non-cash gain of $2.2 million related to the change in fair value of warrants, $0.9 million in income related to our investments, and $0.4 million in other gains, net.
We then evaluated the lease classification based on the below: • Pursuant to ASC 842-30, we will classify a lease as a sales-type lease if: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. • Pursuant to ASC 842-30, when none of the sales-type lease classification criteria are met, a lessor would classify the lease as a direct financing lease when both of the following criteria are met: (i) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments and/or any other third party unrelated to the lessor equals or exceeds substantially all (90% or more) of the fair value of the underlying asset and (ii) it is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. • Pursuant to ASC 842-30, a lessor would classify a lease as an operating lease when none of the sales-type or direct financing lease classification criteria are met.
We then evaluated the lease classification based on the below: 38 • Pursuant to ASC 842-30, we will classify a lease as a sales-type lease if: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. • Pursuant to ASC 842-30, when none of the sales-type lease classification criteria are met, a lessor would classify the lease as a direct financing lease when both of the following criteria are met: (i) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments and/or any other third party unrelated to the lessor equals or exceeds substantially all (90% or more) of the fair value of the underlying asset and (ii) it is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. • Pursuant to ASC 842-30, a lessor would classify a lease as an operating lease when none of the sales-type or direct financing lease classification criteria are met.
Compensation expense for performance-based awards is measured based on the number of shares ultimately expected to vest, estimated at each reporting date based on management’s expectations regarding the relevant performance criteria. We estimate the fair value of stock options on the 38 date of grant using the Black-Scholes option pricing model.
Compensation expense for performance-based awards is measured based on the number of shares ultimately expected to vest, estimated at each reporting date based on management’s expectations regarding the relevant performance criteria. We estimate the fair value of stock options on the date of grant using the Black-Scholes option pricing model.
The increase in rent is due to increased office space to accommodate our growing operations. 32 General and administrative expenses increased by 17%, or $4.9 million, to $33.1 million, compared to $28.3 million in the year-ended December 31, 2023.
The increase in rent is due to increased office space to accommodate our growing operations. General and administrative expenses increased by 17%, or $4.9 million, to $33.1 million, compared to $28.3 million in the year-ended December 31, 2023.
Total operating expenses increased by 29% or $25.3 million to $111.8 million, compared with $86.4 million in the year-ended December 31, 2023. Sales and marketing expenses increased by 56%, or $20.9 million, to $58.2 million, compared to $37.3 million in the year-ended December 31, 2023.
Total operating expenses increased by 29% or $25.3 million to $111.8 million, compared with $86.4 million in the year-ended December 31, 2023. 33 Sales and marketing expenses increased by 56%, or $20.9 million, to $58.2 million, compared to $37.3 million in the year-ended December 31, 2023.
Year Ended Statement of Operations Data: December 31, 2024 December 31, 2023 $ Change % Change Sales revenue $ 63,893 $ 50,143 13,750 27.4 % Lease revenue 358 - 358 100.0 % Total revenues 64,251 50,143 14,108 28.1 % Cost of sales (9,094 ) (7,780 ) (1,314 ) (16.9 )% Gross profit 55,157 42,363 12,794 30.2 % BARDA income - 1,428 (1,428 ) (100.0 )% Operating expenses: Sales and marketing (58,195 ) (37,291 ) (20,904 ) (56.1 )% General and administrative (33,195 ) (28,334 ) (4,861 ) (17.2 )% Research and development (20,360 ) (20,821 ) 461 2.2 % Total operating expenses (111,750 ) (86,446 ) (25,304 ) (29.3 )% Operating loss (56,593 ) (42,655 ) (13,938 ) (32.7 )% Interest expense (5,361 ) (1,143 ) (4,218 ) *nm Other income, net 163 8,483 (8,320 ) (98.1 )% Loss before income taxes (61,791 ) (35,315 ) (26,476 ) (75.0 )% Income tax expense (54 ) (66 ) 12 (18.2 )% Net loss $ (61,845 ) $ (35,381 ) (26,464 ) (74.8 )% *nm = not meaningful Total revenues increased by 28%, or $14.1 million, to $64.3 million, compared to $50.1 million in the year-ended December 31, 2023.
Year Ended Statement of Operations Data: December 31, 2024 December 31, 2023 $ Change % Change Sales revenue $ 63,893 $ 50,143 13,750 27 % Lease revenue 358 - 358 100 % Total revenues 64,251 50,143 14,108 28 % Cost of sales (9,094 ) (7,780 ) (1,314 ) (17 )% Gross profit 55,157 42,363 12,794 30 % BARDA income - 1,428 (1,428 ) (100 )% Operating expenses: Sales and marketing (58,195 ) (37,291 ) (20,904 ) (56 )% General and administrative (33,195 ) (28,334 ) (4,861 ) (17 )% Research and development (20,360 ) (20,821 ) 461 2 % Total operating expenses (111,750 ) (86,446 ) (25,304 ) (29 )% Operating loss (56,593 ) (42,655 ) (13,938 ) (33 )% Interest expense (5,361 ) (1,143 ) (4,218 ) nm Other income, net 163 8,483 (8,320 ) (98 )% Loss before income taxes (61,791 ) (35,315 ) (26,476 ) (75 )% Income tax expense (54 ) (66 ) 12 18 % Net loss $ (61,845 ) $ (35,381 ) (26,464 ) (75 )% *nm = not meaningful Total revenues increased by 28%, or $14.1 million, to $64.3 million, compared to $50.1 million in the year-ended December 31, 2023.
To determine if the contract contains a lease, we evaluate the customer’s rights and ability to control the use of the underlying equipment throughout the contract term, including any equipment substitution rights 37 retained by us.
To determine if the contract contains a lease, we evaluate the customer’s rights and ability to control the use of the underlying equipment throughout the contract term, including any equipment substitution rights retained by us.
The following discussion and analysis of our financial condition and results of operations for the years-ended December 31, 2024 and 2023, should be read in conjunction with our consolidated financial statements and related notes included in this Annual Report. Overview AVITA Medical, Inc. (“we”, “our”, “us”) is a leading therapeutic acute wound care company delivering transformative solutions.
The following discussion and analysis of our financial condition and results of operations for the years-ended December 31, 2025 and 2024, should be read in conjunction with our consolidated financial statements and related notes included in this Annual Report. Overview AVITA Medical, Inc. (“we”, “our”, “us”) is a leading therapeutic acute wound care company delivering transformative solutions.
All costs associated with the issuance of the Credit Agreement accounted for using the fair value option were expensed upon issuance. Refer to Note 6 for further details.
All costs associated with the issuance of the Previous Credit Agreement accounted for using the fair value option were expensed upon issuance. Refer to Note 6 for further details.
With the exception of the milestone payments related to our exclusive development and distribution agreement with Regenity, we do not have any other purchase commitments or long-term contractual obligations, except for lease obligations as of December 31, 2024. Refer to Note 7 of our Consolidated Financial Statements for further details on our lease obligations.
With the exception of the milestone payments related to our exclusive development and distribution agreement with Regenity, we do not have any other purchase commitments or long-term contractual obligations, except for lease obligations as of December 31, 2025. Refer to Note 7 of our Consolidated Financial Statements for further details on our lease obligations.
Consideration related to the RPD will be recognized as Lease revenue and consideration related to the RPK will be recognized as Sales revenues in accordance with guidance in ASC 606, as described above, upon transfer of control of the RPK, which generally occurs at the time the product is shipped or delivered depending on the customer's shipping terms.
Consideration related to the RPD will be recognized as Lease revenue and consideration related to the RPKs will be recognized as Sales revenues in accordance with guidance in ASC 606, as described above, upon transfer of control of the RPKs, which generally occurs at the time the product is shipped or delivered depending on the customer's shipping terms.
The consideration at lease commencement does not contain fixed payments, purchase options, penalty payments or residual value guarantees. The variable consideration is related to the sale of the RPK. As the variable lease payments are not dependent on an index or rate, the variable consideration is excluded from consideration at contract inception resulting in a loss at lease commencement.
The consideration at lease commencement does not contain fixed payments, purchase options, penalty payments or residual value guarantees. The variable consideration is related to the sale of the RPKs. As the variable lease payments are not dependent on an index or rate, the variable consideration is excluded from consideration at contract inception resulting in a loss at lease commencement.
The fair value of the warrant liability, which is reported within Warrant liability on the Consolidated Balance Sheets, is estimated by us based on the Black-Scholes option pricing model with the following inputs (Level 3): • Price of common stock • Estimated expected term • Estimated exercise price • Estimated expected volatility • Estimated risk free interest rate • Estimated expected dividend rate Long-term debt We elected the fair value option (“FVO”) of accounting under ASC 825-10 , Financial Instruments (“ASC 825”), to account for the debt.
The fair value of the warrant liability, which is reported within Warrant liability on the Consolidated Balance Sheets, is estimated by us based on the Black-Scholes option pricing model with the following inputs (Level 3): • Price of common stock • Estimated expected term • Estimated exercise price • Estimated expected volatility • Estimated risk free interest rate • Estimated expected dividend rate Loan Facility We elected the fair value option (“FVO”) of accounting under ASC 825-10 , Financial Instruments (“ASC 825”), to account for the debt.
The below assumptions were used in the Monte Carlo simulation (Level 3): • Estimated risk free interest rate • Estimated revenue volatility • Estimated revenue discount rate • Estimated future revenue projection • Estimated expected dividend rate 39 Income Taxes Income taxes are accounted for using the liability method.
The below assumptions were used in the Monte Carlo simulation (Level 3): • Estimated risk free interest rate • Estimated revenue volatility • Estimated revenue discount rate • Estimated future revenue projection • Estimated expected dividend rate 40 Income Taxes Income taxes are accounted for using the liability method.
See Note 15 to our Consolidated Financial Statements included in this Annual Report for additional detail on income taxes. Recent accounting pronouncements See discussion of recent accounting pronouncements in Note 2 of the Consolidated Financial Statements located in Item 8 in this Annual Report. 40
See Note 15 to our Consolidated Financial Statements included in this Annual Report for additional detail on income taxes. Recent accounting pronouncements See discussion of recent accounting pronouncements in Note 2 to the Consolidated Financial Statements located in Item 8 in this Annual Report. 41
Under the terms of our exclusive development and distribution agreement with Regenity, we have a further obligation to make up to an additional $3.0 million payment on or before January 4, 2026 to guarantee development and manufacturing capacity (and related resources), contingent on positive results of certain clinical studies.
Under the terms of our amended exclusive development and distribution agreement with Regenity, we have a further obligation to make up to an additional $3.0 million payment on or before January 4, 2027 to guarantee development and manufacturing capacity (and related resources), contingent on positive results of certain clinical studies.
In accordance with ASC 842, variable lease payments will be recognized once the sale of the RPK occurs and control has transferred to the customer. Consideration will be allocated to the RPD and RPK based on the SSP.
In accordance with ASC 842, variable lease payments will be recognized once the sale of the RPKs occurs and control has transferred to the customer. Consideration will be allocated to the RPD and RPKs based on the SSP.
Revenue recognition for contracts that are within the scope of ASC 606 and ASC 842 We enter into contracts with customers where we receive consideration for the RPK and do not receive additional consideration for the RPD.
Revenue recognition for contracts that are within the scope of ASC 606 and ASC 842 We enter into contracts with customers where we receive consideration for the RPKs and do not receive additional consideration for the RPD.
ASC 825 provides FVO election that allows companies an irrevocable election to use fair value at the date of issuance and subsequently remeasure every reporting period. The fair value of the debt is reported in the Consolidated Balance Sheets. Changes in fair value are reported in earnings in Other income in the Consolidated Statements of Operations.
ASC 825 provides FVO election that allows companies an irrevocable election to use fair value at the date of issuance and subsequently remeasure every reporting period. The fair value of the loan facility is reported in the Consolidated Balance Sheets. Changes in fair value are reported in earnings in Other income in the Consolidated Statements of Operations.
As such, we classify the lease as an operating lease. The contracts contain a lease component, the RPD, and a non-lease component, the RPK. The lease component will be accounted for under ASC 842 and the non-lease component will be accounted for under ASC 606, as described above.
As such, we classify the lease as an operating lease. The contracts contain a lease component, the RPD, and a non-lease component, the RPKs. The lease component will be accounted for under ASC 842 and the non-lease component will be accounted for under ASC 606, as described above.
There remains significant uncertainty in the current macroeconomic environment due to factors including supply chain shortages, increased cost of healthcare, changes to inflation rates, a competitive labor market, and other related global economic conditions and geopolitical conditions. If these conditions continue or worsen, they could adversely impact our future operating results.
There remains significant uncertainty in the current macroeconomic environment due to factors including supply chain shortages, increased cost of healthcare, changes to inflation rates, a competitive labor market, tariffs, and other related global economic conditions and geopolitical conditions. If these conditions continue or worsen, they could adversely impact our future operating results. Geopolitical conditions may also impact our operations.
Under the terms of the Third Amendment and subject to the payment by the Company of a consent fee to the Lender, the Company and the Lender mutually agreed to (1) terminate two additional tranches of available debt in the aggregate amount of $50.0 million and (2) remove the trailing 12-month revenue covenant for the fourth quarter of 2024, which was set at $67.5 million.
Under the terms of the Third Amendment and subject to our payment of a consent fee to the Lender, we mutually agreed to (1) terminate two additional tranches of available debt in the aggregate amount of $50.0 million and (2) remove the trailing 12-month revenue covenant for the fourth quarter of 2024, which was set at $67.5 million.
Year-Ended December 31, 2023, compared to the Year-Ended December 31, 2022 The table below summarizes the results of our operations for each of the periods presented (in thousands).
Year-Ended December 31, 2024, compared to the Year-Ended December 31, 2023 The table below summarizes the results of our operations for each of the periods presented (in thousands).
Any changes in fair value caused by instrument-specific credit risk are presented separately in other comprehensive income. We have elected to present interest expense separately from changes in fair value and therefore will present interest expense associated with the debt.
Any changes in fair value caused by instrument-specific credit risk are presented separately in other comprehensive income. We have elected to present interest expense separately from changes in fair value and therefore will present interest expense associated with the loan facility.
The fair value of the debt was determined using a Monte Carlo simulation in order to capture the probability of different potential cash flows outcomes associated with the contractual terms of the instrument.
The fair value of the loan facility was determined using a Monte Carlo simulation in order to capture the probability of different potential cash flows outcomes associated with the contractual terms of the instrument.
The RPD depreciation has a direct relationship to the number of RPK units sold. Based on customer usage, each purchase of an RPK unit results in a 1/200 depreciation to the RPD. See Note 5 to our Consolidated Financial Statements included in this Annual Report for additional detail on revenue recognition.
The RPD depreciation has a direct relationship to the number of RPKs sold. Based on customer usage, each purchase of RPKs results in a 1/200 depreciation to the RPD. See Note 5 to our Consolidated Financial Statements included in this Annual Report for additional detail on revenue recognition.
The single-use RECELL Autologous Cell Harvesting Device (“RECELL Ease-of-Use” or “RECELL EOU”) is approved by the FDA for the treatment of thermal burn wounds and full-thickness skin defects, and repigmentation of stable depigmented vitiligo lesions. Our next-generation device, RECELL GO ™ Autologous Cell Harvesting Device (“RECELL GO”), is FDA-approved to treat thermal burn wounds and full-thickness skin defects.
The single-use RECELL Autologous Cell Harvesting Device (“RECELL Ease-of-Use” or “RECELL EOU”) is approved by the FDA for the treatment of thermal burn wounds and full-thickness skin defects. Our next-generation device, RECELL GO ® Autologous Cell Harvesting Device (“RECELL GO”), is FDA-approved to treat thermal burn wounds and full-thickness skin defects.
Interest expense increased approximately $4.2 million in comparison to the prior year due to the interest expense related to the long-term debt as part of the OrbiMed Credit Agreement for the full year, for an aggregate principal amount owed of $40.0 million. Other income, net decreased by $8.3 million to $0.2 million.
Interest expense increased approximately $4.2 million in comparison to the prior year due to the interest expense related to long-term debt for the full year, for an aggregate principal amount owed of $40 million. Other income, net decreased by $8.3 million to $0.2 million.
The increase in cash provided by investing activities is primarily attributable to lower cash outflows from purchases of marketable securities offset by lower cash inflows from maturities of marketable securities and an increase in cash 35 outflow for capital expenditures in the current year compared to the prior year.
The decrease in cash provided by investing activities is primarily attributable to lower cash inflows from maturities of marketable securities offset by lower cash outflows from purchases of marketable securities and a decrease in cash outflow for capital expenditures in the current year compared to the prior year.
In the United States, we also hold the rights to market, sell, and distribute PermeaDerm ® , a biosynthetic wound matrix, under the terms of an exclusive multi-year distribution agreement (the “Stedical Agreement”) with Stedical Scientific, Inc. (“Stedical”). We also entered into an exclusive multi-year development and distribution agreement with Collagen Matrix, Inc. dba Regenity Biosciences (“Regenity”).
In addition, in the United States, we hold the rights to manufacture and exclusively market, sell, and distribute PermeaDerm ® , a biosynthetic wound matrix, under the terms of exclusive multi-year distribution and contract manufacturing agreements with Stedical Scientific, Inc. (“Stedical”). We also entered into an exclusive multi-year development and distribution agreement with Collagen Matrix, Inc. dba Regenity Biosciences (“Regenity”).
As a condition to the execution of the Fourth Amendment, we issued to the Lender a warrant to purchase up to 145,180 shares of our common stock, at an exercise price of $0.01 per share, with a term of 10 years from the issuance date.
In consideration of the Fourth Amendment, we issued to the Lender warrants to purchase up to 145,180 shares of our common stock, at an exercise price of $0.01 per share, with a term of 10 years from the issuance date.
The increase in capital expenditures in the current year is primarily related to the leasehold improvement in the Ventura production facility to enhance manufacturing output and materials related to our RECELL GO RPDs. Net cash provided by financing activities was $3.5 million and $40.4 million for the years-ended December 31, 2024 and 2023, respectively.
The decrease in capital expenditures in the current year is primarily related to the leasehold improvement in the Ventura production facility to enhance manufacturing output and materials related to our RECELL GO RPDs in the prior year. Net cash provided by financing activities was $14.9 million and $3.5 million for the years-ended December 31, 2025 and 2024, respectively.
Although we do not have operations in Russia, Ukraine or in the Middle East, the continuation of the military conflicts in these regions and/or an escalation of the conflicts beyond their current scope may further weaken the global economy that could result in additional inflationary pressures or supply chain constraints.
Although we do not have operations in Russia, Ukraine, the Middle East, or Asia, the continuation or threat of military conflicts in these regions or any escalation of conflicts beyond their current scope may further weaken the global economy resulting in additional inflationary pressures or supply chain constraints.
Regenity will manufacture and supply Cohealyx ™ , an AVITA Medical-branded, FDA-cleared, collagen-based dermal matrix. Under the agreement, we will hold the exclusive rights to market, sell, and distribute Cohealyx in the U.S., with potential expansion into the European Union, Australia, and Japan.
Regenity manufactures and supplies Cohealyx ™ , an AVITA Medical-branded, FDA-cleared, collagen-based dermal matrix. Under the agreement with Regenity, we hold the exclusive rights to market, sell, and distribute Cohealyx in the U.S., with the potential to expand such commercialization into the European Union, Australia, and Japan.
The following assumptions were used in the valuation of stock options: • Expected volatility – determined using the historical volatility using daily intervals over the expected term. • Expected dividends – None, based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future. • Expected term – the expected term of our stock options for tenure-only vesting has been determined utilizing the “simplified” method as described in the SEC’s Staff Accounting Bulletin No. 107 relating to stock-based compensation.
Determining the estimated fair value at the grant date requires judgment in determining the appropriate valuation model and assumptions, including, risk-free rate, volatility rate, annual dividend yield and the expected term. 39 The following assumptions were used in the valuation of stock options: • Expected volatility – determined using the historical volatility using daily intervals over the expected term. • Expected dividends – None, based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future. • Expected term – the expected term of our stock options for tenure-only vesting has been determined utilizing the “simplified” method as described in the SEC’s Staff Accounting Bulletin No. 107 relating to stock-based compensation.
The RPK is a single-use cartridge that contains the RECELL Enzyme ™ . The RPD regulates the pressure applied to disaggregate the cells and precisely controls the incubation time of the RECELL Enzyme to optimize cell yield and promote cell viability.
The RPD regulates the pressure applied to disaggregate the cells and precisely controls the incubation time of the RECELL Enzyme to optimize cell yield and promote cell viability.
Warrants Warrants are accounted for in accordance with applicable accounting guidance provided in ASC 815 , Derivatives and Hedging – Contracts in Entity’s Own Equity (“ASC 815”), as a liability based on the specific terms of the warrant agreement and recorded at fair value.
Warrants Warrants, other than the Penny Warrants as defined and described in Note 4 to our Consolidated Financial Statements included in this Annual Report, are accounted for in accordance with applicable accounting guidance provided in ASC 815 , Derivatives and Hedging – Contracts in Entity’s Own Equity (“ASC 815”), as a liability based on the specific terms of the warrant agreement and recorded at fair value.
The following table summarizes our cash flows for the periods presented: Year Ended (in thousands) December 31, 2024 December 31, 2023 Net cash used in operations $ (48,939 ) $ (38,011 ) Net cash provided by investing activities 37,363 1,607 Net cash provided by financing activities 3,508 40,374 Effect of foreign exchange rate on cash and cash equivalents - (16 ) Net increase/(decrease) in cash and cash equivalents (8,068 ) 3,954 Cash and cash equivalents at beginning of the period 22,118 18,164 Cash and cash equivalents at end of the period 14,050 22,118 Net cash used in operating activities was $48.9 million and $38.0 million during the years-ended December 31, 2024 and 2023, respectively.
The following table summarizes our cash flows for the periods presented: Year Ended (in thousands) December 31, 2025 December 31, 2024 Net cash used in operating activities $ (31,195 ) $ (48,939 ) Net cash provided by investing activities 12,452 37,363 Net cash provided by financing activities 14,936 3,508 Net decrease in cash and cash equivalents (3,807 ) (8,068 ) Cash and cash equivalents at beginning of the period 14,050 22,118 Cash and cash equivalents at end of the period 10,243 14,050 Net cash used in operating activities was $31.2 million and $48.9 million during the years-ended December 31, 2025 and 2024, respectively.
Research and development expenses increased by 50%, or $6.9 million, to $20.8 million, compared to $13.9 million incurred in the year-ended December 31, 2022.
Research and development expenses increased by 2%, or $0.5 million, to $20.8 million, compared to $20.3 million in the year-ended December 31, 2024.
RECELL harnesses the regenerative properties of a patient’s own skin to create an autologous skin cell suspension, Spray-On Skin ™ Cells, delivering a transformative solution at the point of care. This breakthrough technology serves as the catalyst for a new treatment paradigm enabling improved clinical outcomes.
RECELL harnesses the healing properties of a patient’s own skin to create an autologous skin cell suspension, Spray-On Skin ™ Cells, offering an innovative solution for improved clinical outcomes at the point of care.
The Credit Agreement provides for a five-year senior secured credit facility in an aggregate principal amount of up to $90.0 million (the “Loan Facility”), of which $40.0 million was borrowed on the Closing Date, less certain fees and expenses payable to or on behalf of the Lender.
The Previous Credit Agreement provided for a five-year senior secured credit facility in an aggregate principal amount of up to $90.0 million, of which $40.0 million was borrowed, less certain fees and expenses. On November 7, 2024, we entered into the third amendment (the “Third Amendment”) to the Previous Credit Agreement.
RECELL GO introduces enhanced features that streamline the preparation of Spray-On Skin Cells and improves workflow efficiency in the operating room. It consists of two components: the RECELL GO Processing Device (the “RPD”) and the RECELL GO Preparation Kit (the “RPK”). The RPD is a multi-use, AC-powered device that controls the RPK.
RECELL GO introduces enhanced features that improve consistency and standardization across clinical settings. It consists of two components: the RECELL GO Processing Device (the “RPD”) and the RECELL GO Preparation Kit (the “RPK”). The RPD is a multi-use, AC-powered device that controls the RPK. The RPK contains a single-use cartridge and the RECELL Enzyme ™ .
We regularly review our capital structure and seek to take advantage of available opportunities to improve outcomes for us and our stockholders. For the year-ended December 31, 2024, there were no dividends paid and we have no plans to commence the payment of dividends.
For the year-ended December 31, 2025, there were no dividends paid and we have no plans to commence the payment of dividends.
The increase primarily resulted from higher operating costs, partially offset by increased revenues. Net cash provided by investing activities was $37.4 million and $1.6 million during the years-ended December 31, 2024 and 2023, respectively.
The decrease in cash used by operating activities is primarily attributable to higher gross profit and lower operating costs. Net cash provided by investing activities was $12.5 million and $37.4 million during the years-ended December 31, 2025 and 2024, respectively.
On October 18, 2023 (the “Closing Date”), the Company entered into a Credit Agreement (the “Credit Agreement”), by and between the Company, as borrower, and an affiliate of OrbiMed Advisors, LLC, as the lender and administrative agent (the “Lender”).
On March 31, 2025, we received a waiver related to the trailing 12-month revenue covenant for the first quarter of 2025. On October 18, 2023, we entered into a credit agreement (as amended and modified, the “Previous Credit Agreement”), by and between us, as borrower, and an affiliate of OrbiMed Advisors, LLC, as the lender and administrative agent.
Capital Management and Material Cash Requirements We aim to manage capital to maintain optimal returns to stockholders and benefits for other stakeholders. We also aim to maintain a capital structure that ensures the lowest cost of capital available to us.
We also aim to maintain a capital structure that ensures the lowest cost of capital available to us. We regularly review our capital structure and seek to take advantage of available opportunities to improve outcomes for us and our stockholders.
To determine revenue recognition for arrangements that are within the scope of Topic 606, Revenue from contracts with customers , (“ASC 606”), we perform the following five steps: 1. Identify the contract with a customer 2. Identify the performance obligations 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations 5.
Revenue for the RECELL GO is disaggregated between two accounting standards: (1) ASC 606 for the RPKs and (2) ASC 842, Leases (“ASC 842”) for the RPD. 37 To determine revenue recognition for arrangements that are within the scope of Topic 606, Revenue from contracts with customers , (“ASC 606”), we perform the following five steps: 1.
In the prior year, the Company recorded service revenue for the emergency preparedness services provided to BARDA. • Lease revenue for the RPD. 36 Our sale of the RECELL EOU and PermeaDerm products are accounted for under ASC 606, Revenue from contracts with customers (“ASC 606”).
Revenue Recognition We generate revenues primarily from: • The sale of RECELL EOU, RPK and mini RPK (collectively, the “RPKs”), PermeaDerm and Cohealyx products to hospitals, other treatment centers, and distributors. • Lease revenue for the RPD. Our sale of the RECELL EOU, PermeaDerm, and Cohealyx products are accounted for under ASC 606, Revenue from contracts with customers (“ASC 606”).
The fair value of RSUs is based on the closing stock price as determined per Nasdaq at the date of grant. Determining the estimated fair value at the grant date requires judgment in determining the appropriate valuation model and assumptions, including, risk-free rate, volatility rate, annual dividend yield and the expected term.
The fair value of RSUs is based on the closing stock price as determined per Nasdaq at the date of grant.
At the forefront of our portfolio is our patented and proprietary RECELL ® System (“RECELL System” or “RECELL”), approved by the U.S. Food & Drug Administration (the “FDA”) for the treatment of thermal burn wounds and full-thickness skin defects, and for repigmentation of stable depigmented vitiligo lesions.
Our solutions improve the healing outcomes for patients with traumatic injuries and surgical repairs, addressing critical healing needs that arise from unpredictable and life-changing events. At the forefront of our portfolio is RECELL ® (“RECELL”), approved by the U.S. Food & Drug Administration (the “FDA”) for the treatment of thermal burn wounds and full-thickness skin defects.
We also recognized $1.6 million and $0.7 million of non-cash charges due to the change in fair value of the debt and the warrant liability, respectively.
In the prior period, other income, net of $0.2 million consisted of $2.7 million in income related to our investments and $0.3 million in other gains, net offset by non-cash charges of $2.5 million due to the change in fair value of the debt and $0.3 million due to the change in fair value of warrant liability.
Subsequent to December 31, 2024, on February 13, 2025, we entered into a fourth amendment to the Credit Agreement (the “Fourth Amendment”), which amended the trailing 12-month revenue covenant to $73.0 million for the quarter ending March 31, 2025, to $78.0 million for the quarter ending June 30, 2025, to $84.0 million for the quarter ending September 30, 2025, to $92.0 million for the quarter ending December 31, 2025 and to $103.0 million for the quarter ending March 31, 2026.
On November 5, 2025, we entered into a sixth amendment to the Previous Credit Agreement (the “Sixth Amendment”), which amended the trailing 12-month revenue covenant for the fourth quarter of 2025 to $70.0 million for the quarter ending December 31, 2025, and waived the event of default caused by the “going concern” qualification in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2025.
BARDA income decreased 56% or $1.8 million to $1.4 million, compared to $3.2 million in the year-ended December 31, 2022, due to reimbursable clinical trials winding down. Total operating expenses increased by 46% or $27.3 million to $86.4 million, compared with $59.1 million in the year-ended December 31, 2022.
Total operating expenses decreased by 9% or $10.4 million to $101.4 million, compared with $111.8 million in the year-ended December 31, 2024. Sales and marketing expenses decreased by 9%, or $5.1 million, to $53.1 million, compared to $58.2 million in the year-ended December 31, 2024.
Changes in reimbursement rates by third party payors may place additional financial pressure on hospitals and the broader healthcare system. Healthcare institutions may take actions to mitigate any persistent pressures on their budgets and such actions could impact the future demand for our products. Geopolitical conditions may also impact our operations.
Business Environment and Current Trends Changes in reimbursement rates and coverage policy by third party payors may place additional financial pressure on hospitals and the broader healthcare system. These changes could reduce demand for our products, particularly if healthcare providers face lower margins or additional administrative burdens.
Launch will begin with trauma and burn centers that currently treat smaller wounds during the first quarter of 2025. 31 Results of Operations Year-Ended December 31, 2024, compared to the Year-Ended December 31, 2023 The table below summarizes the results of our operations for each of the periods presented (in thousands).
Together, these data reflect growing use of AVITA Medical’s integrated portfolio across wound coverage, preparation and definitive closure. 31 Results of Operations Year-Ended December 31, 2025, compared to the Year-Ended December 31, 2024 The table below summarizes the results of our operations for each of the periods presented (in thousands).
AVITA Medical has funded its research and development activities, and more recently its substantial investment in sales and marketing activities, through the issuance of debt. As of December 31, 2024, the Company had approximately $14.1 million in cash and cash equivalents and $21.8 million in marketable securities.
We have funded our research and development activities, and more recently our substantial investment in sales and marketing activities, through the sale of our products, the issuance of equity securities, and debt financing.
The $115.0 million revenue covenant for all subsequent quarters through the date of debt maturity remains in effect.
The revenue covenants for all subsequent quarters remained in effect.
The decrease in cash provided by financing activities was due to the issuance of debt in the prior year offset by increases in the proceeds from the exercises of stock options and purchases of stock under the ESPP in the current year.
The increase in cash provided by financing activities was due to the net proceeds received from the Placement offset by decreases in the proceeds from the exercises of stock options and purchases of stock under the ESPP in the current year. 36 Capital Management and Material Cash Requirements We aim to manage capital so that the Company continues as a going concern while also maintaining optimal returns to stockholders, as well as other benefits for our stakeholders.
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Our technologies are designed to optimize skin restoration procedures, effectively accelerating patient healing and recovery. Our solutions improve the healing outcomes for patients with traumatic injuries and surgical repairs, addressing critical healing needs that arise from unpredictable and life-changing events.
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RECELL GO mini ™ Autologous Cell Harvesting Device (“RECELL GO mini”), which was approved by the FDA in December 2024, is a line extension of RECELL GO, designed specifically to treat smaller wounds up to 480 cm 2 .
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We are focused on becoming the leading provider of therapeutic acute wound care solutions addressing unmet medical needs in burn injuries and full-thickness skin defects. We will continue to drive commercial revenue growth to generate free cash flow and achieve operating profit.
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It utilizes the same RPD but features a RECELL GO mini Preparation Kit, which includes a single-use RECELL GO mini cartridge optimized for smaller skin samples. These modifications are intended to align with the needs of clinicians treating smaller wounds, and to support broader adoption of the RECELL GO platform in trauma centers.
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To achieve these objectives, we intend to: • Become the standard of care in the U.S. burn care market by increasing penetration and adoption in burn centers with our recently FDA-approved RECELL GO • Expand adoption of RECELL technology for the treatment of full-thickness skin defects in the U.S. with RECELL GO • Launch RECELL GO mini, which is designed to address smaller wounds, following FDA approval in December of 2024 • Launch Cohealyx ™ after FDA 510(k) clearance received in December of 2024 • Expand our global presence within Australia, the European Union, Japan, and the U.K.through the exclusive use of third-party distributors • Continue to grow commercial activities in Japan through our partnership with COSMOTEC Company, Ltd (“COSMOTEC”) by leveraging our current Pharmaceuticals and Medical Devices Act approval for RECELL with an indication in burns • Continue to pursue business development opportunities that are complementary to our core RECELL technology and/or our targeted markets, such as our exclusive distribution agreements with Stedical and Regenity • Expect post-market study, TONE, and the health care economics study, both related to our vitiligo initiative to be published in early 2025 30 Business Environment and Current Trends The macroeconomic environment may have unexpected adverse effects on businesses and healthcare institutions globally that may negatively impact our consolidated operating results.
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We are executing a focused commercial strategy centered on approximately 200 U.S. burn and trauma centers that represent the highest value and procedural volume within the acute wound care market. These institutions are core to our commercialization efforts due to their high concentration of complex inpatient cases and consistent procedural throughput.
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Recent Developments On January 10, 2024, we entered into an exclusive multi-year distribution agreement with Stedical to commercialize PermeaDerm® Biosynthetic Wound Matrix (“PermeaDerm”) in the United States. PermeaDerm is cleared by the FDA as a transparent matrix for use in the treatment of a variety of wound types until healing is achieved.
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By prioritizing burn and trauma centers, we are targeting the most critical segments of acute wound care to maximize clinical impact and drive adoption across our portfolio.
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Under the terms of the Stedical Agreement, we hold the exclusive rights to market, sell, and distribute PermeaDerm products, including any future enhancements or modifications, within the United States. The initial term is for five years, with the option to renew for an additional five years, contingent upon meeting certain minimum requirements.
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To further our mission of improving clinical outcomes and establishing new standards of acute wound care, we have outlined the following strategic objectives: • Increasing market penetration in U.S. burn centers, positioning RECELL as the standard of care in burn management; • Expanding adoption of RECELL for the treatment of traumatic and surgical wounds throughout the U.S.; • Commercializing and expanding adoption of Cohealyx as a dermal matrix that supports wound bed preparation and accelerates readiness for grafting; • Driving adoption of RECELL GO mini in burn and trauma centers treating smaller wounds; • Advancing post-market clinical studies for Cohealyx and PermeaDerm to generate additional clinical and health economic evidence supporting adoption; • Expanding internationally through distributor-led commercialization upon receipt of regulatory approvals; 29 • Driving commercial revenue growth, improving operating leverage, generating positive cash flow, and achieving long-term operating profitability; and • Pursuing additional business development opportunities complementary to our target acute wound care markets.
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On February 16, 2024, we amended our contract with the Biomedical Advanced Research and Development Authority (“BARDA”), under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services, dated September 29, 2015, to extend the term through September 28, 2025.
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For example, in 2025 the Centers for Medicare & Medicaid Services (“CMS”) designated pricing responsibility for the Current Procedural Terminology (“CPT”) code used with RECELL to the seven regional Medicare Administrative Contractors (“MACs”). MAC delay in establishing and publishing reimbursement rates temporarily slowed clinician use of RECELL.
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Under the modified contract, BARDA will have access to our RECELL inventory in the event of a national emergency. In the case of a national emergency, BARDA will pay for RECELL devices at a reduced price for the first 1,000 units and will then pay retail price for any additional units.
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As of January 2026, all seven MACs have established pricing, six of which have been published, restoring reimbursement clarity and supporting a return toward normalized utilization. The macroeconomic environment may have unexpected adverse effects on businesses and healthcare institutions globally that may negatively impact our consolidated operating results.
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No additional inventory build will be required as part of this modification as we have sufficient inventory in stock to fulfill this requirement. BARDA will pay us approximately $333,000 in maintenance fees over the term of the contract to ensure its first right of access to our RECELL inventory.
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Recent Developments On January 13, 2026, we closed a five-year credit facility providing up to $60 million in capital with a new lender and refinanced our existing debt, receiving total net proceeds of $6.0 million after repayment of our existing debt and certain fees.
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On May 29, 2024, the FDA approved our premarket approval (“PMA”) supplement for RECELL GO, our next generation autologous cell harvesting device, to treat thermal burn wounds and full-thickness skin defects. Following this approval, we shipped the first RECELL GO order on May 30, 2024, to accommodate the first case for its use on May 31, 2024.
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As part of the new credit facility, we established trailing twelve-month (“TTM”) revenue covenants aligned with our current operating trajectory. The initial TTM revenue covenant is $68.5 million for the first quarter ending March 31, 2026, and $73 million for the full year 2026. For additional information, see Liquidity and Capital Resources below.
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On June 28, 2024, we submitted a PMA supplement for RECELL GO mini, which is designed to address small wounds up to 480 cm 2 . This version retains the same multi-use processing units as RECELL GO but features a smaller cartridge designed for the smaller donor skin samples needed for smaller wounds.
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On January 5, 2026, the Board of Directors recognized the contributions of long-time Director (and former Chair of the Board) Lou Panaccio, whose last day of service was December 31, 2025. Following Mr.
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This submission maintains the FDA Breakthrough Device designation from predecessor devices, providing a prioritized 180-day review period.
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Panaccio’s retirement, the Board was pleased to announce Joe Woody’s appointment as a new Director pursuant to an offer letter to join the Board as of January 1, 2026. On October 16, 2025, Mr. Vance, the Chair of the Board of Directors, assumed the position of Interim Chief Executive Officer (the “Interim CEO”) upon the departure of Mr.

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