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Avita Medical Ltd (RCEL)
:RCEL
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Avita Medical
(NASDAQ:RCEL)
55Neutral
Positive Factors
Market Expansion
The acquisition of Cohealyx, a collagen-based dermal matrix product, is expected to triple Avita's addressable market in burns.
Product Portfolio
Avita's flagship RECELL platform is generating nice traction, as evidenced by the 29% revenue growth performance.
Revenue Growth
Avita is forecasting remarkable revenue growth of 55-65%, a significant acceleration from previous performance, and has outlined plans to achieve key profitability metrics.
Negative Factors
Debt Agreement
AVITA amended its debt agreement with OrbiMed to relax revenue requirements over the next few quarters, removing a significant perceived overhang on the stock.
Avita Medical (RCEL) vs. S&P 500 (SPY)
Market Cap
$227.20M
Dividend YieldN/A
Average Volume (3M)222.44K
Price to Earnings (P/E)―
Beta (1Y)2.58
Revenue Growth32.24%
EPS Growth-66.93%
CountryUS
Employees260
SectorHealthcare
Sector Strength69
IndustryMedical - Devices
Share Statistics
EPS (TTM)-2.39
Shares Outstanding26,357,542
10 Day Avg. Volume261,712
30 Day Avg. Volume222,440
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.68
Price to Cash Flow (P/CF)-7.30
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$16.20Price Target Upside87.94% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Avita Medical Business Overview & Revenue Model
Company DescriptionAvita Medical (RCEL) is a regenerative medicine company that develops and commercializes innovative therapies for skin restoration. The company's flagship product, the RECELL System, is designed to harness the body's natural healing processes to treat a variety of skin injuries, including burns, chronic wounds, and scars. Operating primarily in the healthcare sector, Avita Medical aims to provide advanced medical solutions that improve patient outcomes and reduce the need for complex surgical interventions.
How the Company Makes MoneyAvita Medical generates revenue primarily through the sale of its RECELL System, which is marketed to healthcare facilities and practitioners for the treatment of skin injuries. The company employs a direct sales model in major markets such as the United States, where it benefits from a strong network of relationships with hospitals and burn centers. Additionally, Avita Medical may engage in partnerships or licensing agreements to expand its market presence and product offerings, though specific partnerships are not detailed here. The company's earnings are driven by the adoption of its technology in clinical settings, reimbursed through healthcare insurance providers, and its ability to demonstrate the cost-effectiveness and clinical benefits of its products in comparison to traditional treatment methods.
Avita Medical Financial Statement Overview
Summary
Avita Medical's financial performance is marred by significant profitability issues and high leverage. Despite a strong gross margin, the deep negative net profit margin and high debt levels pose considerable risks. The company's negative cash flow metrics further highlight the challenges in achieving financial stability.Income Statement
Avita Medical's TTM revenue growth of 19.7% shows positive momentum, but the company faces challenges with negative profitability metrics. The gross profit margin is strong at 85.7%, indicating effective cost management in production. However, the net profit margin remains deeply negative at -95.5%, with both EBIT and EBITDA margins also negative, reflecting significant operational and financial losses.40
Negative
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of 3.73, indicating significant leverage and potential financial risk. The equity ratio stands at 15.1%, suggesting limited equity support relative to total assets. The return on equity is negative at -468.8%, driven by substantial net losses, highlighting challenges in generating returns for shareholders.45
Neutral
Cash Flow
The cash flow analysis shows negative free cash flow growth and operating cash flow, which is concerning. The operating cash flow to net income ratio stands at 0.90, suggesting inefficiencies in converting revenue into cash. Additionally, the free cash flow to net income ratio is 1.04, reflecting the company's continued struggles with cash flow generation.35
Negative
| Breakdown | |||||
| TTM | Dec 2022 | Jun 2021 | Jun 2020 | Jun 2018 | Jun 2017 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 58.88M | 50.56M | 14.26M | 20.67M | 1.26M | 1.18M | Gross Profit |
| 57.47M | 41.69M | 11.29M | 16.36M | 517.47K | 675.00K | EBIT |
| -54.61M | -40.40M | -42.68M | -61.84M | -18.70M | -12.67M | EBITDA |
| -53.74M | -39.57M | -41.53M | -61.17M | -18.55M | -12.53M | Net Income Common Stockholders |
| -50.80M | -39.17M | -42.03M | -60.90M | -17.21M | -11.51M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 116.55M | 116.55M | 73.64M | 106.70M | 14.82M | 3.79M | Total Assets |
| 144.34M | 144.34M | 82.46M | 119.49M | 23.00M | 7.67M | Total Debt |
| 449.48K | 449.48K | 1.92M | 2.78M | 134.25K | 0.00 | Net Debt |
| -26.23M | -26.23M | -71.72M | -103.93M | -14.68M | -3.79M | Total Liabilities |
| 19.87M | 19.87M | 10.06M | 14.58M | 4.01M | 2.55M | Stockholders Equity |
| 124.47M | 124.47M | 72.40M | 104.91M | 18.99M | 5.12M |
| Cash Flow | Free Cash Flow | ||||
| -48.00M | -28.71M | -23.59M | -33.82M | -18.00M | -8.99M | Operating Cash Flow |
| -46.24M | -28.04M | -22.75M | -32.96M | -17.51M | -8.56M | Investing Cash Flow |
| 84.88M | -28.40M | -847.00K | -1.23M | -493.15K | 195.25K | Financing Cash Flow |
| 2.77M | 1.32M | 77.06M | 111.66M | 28.77M | 8.24M |
Avita Medical Technical Analysis
Negative
8.62
Price Trends
8.88
Negative
10.28
Negative
10.06
Negative
Market Momentum
-0.16
Positive
40.31
Neutral
7.24
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCEL, the sentiment is Negative. The current price of 8.62 is below the 20-day moving average (MA) of 8.62, below the 50-day MA of 8.88, and below the 200-day MA of 10.06, indicating a bearish trend. The MACD of -0.16 indicates Positive momentum. The RSI at 40.31 is Neutral, neither overbought nor oversold. The STOCH value of 7.24 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RCEL.
Avita Medical Risk Analysis
Avita Medical disclosed 38 risk factors in its most recent earnings report. Avita Medical reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Avita Medical Peers Comparison
Overall Rating
UnderperformOutperform
Sector (48)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $4.77B | 55.22 | 10.34% | ― | 473.02% | 1620.44% | |
71 Outperform | $1.60B | 12.17 | 14.74% | 1.55% | 4.98% | 104.60% | |
70 Outperform | $2.71B | 79.77 | 19.39% | ― | 82.74% | ― | |
68 Neutral | $2.10B | 223.46 | 4.00% | ― | 20.10% | ― | |
67 Neutral | $1.01B | 24.04 | 25.01% | ― | 8.52% | -32.91% | |
55 Neutral | $227.20M | ― | -230.96% | ― | 32.24% | -66.93% | |
48 Neutral | $6.35B | 1.19 | -46.26% | 2.67% | 19.24% | 1.75% | |
36 Underperform | $36.10M | ― | 41.08% | ― | -0.55% | 49.85% |
* Healthcare Sector Average
Performance Comparison
RCEL
Avita Medical
8.62
-0.84
-8.88%
VCEL
Vericel
41.25
-7.45
-15.30%
CNMD
Conmed
51.73
-22.63
-30.43%
KPTI
Karyopharm Therapeutics
4.29
-13.03
-75.23%
MDXG
MiMedx Group
6.84
0.49
7.72%
KRYS
Krystal Biotech
165.00
-4.75
-2.80%
TMDX
TransMedics Group
80.58
-11.24
-12.24%
Avita Medical Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -1.82% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Neutral
AVITA Medical's earnings call reflected a transformative year with substantial revenue growth, improved gross profit margins, and a significant increase in total addressable market due to new product launches. However, the company faced challenges with a Q4 revenue shortfall, increased net losses, and higher operating expenses, which balanced the positive achievements.Highlights
Strong Revenue Growth
AVITA Medical reported a 30% increase in commercial revenue for Q4 2024 compared to the same period in 2023, driven by the continued deployment and adoption of RECELL GO, and new accounts in trauma centers.
Portfolio Expansion and Market Potential
The launch of new products, including RECELL GO mini, PermeaDerm, and Cohealyx, expanded the total addressable market (TAM) from $500 million to $3.5 billion in the U.S. alone.
Improved Gross Profit Margin
Q4 2024 gross profit margin improved to 87.6%, slightly increasing from 87.3% in the same period of 2023.
Significant TAM Increase
The company expanded its TAM from $500 million two years ago to $3.5 billion, largely due to portfolio expansion into trauma centers.
Positive Clinical Outcomes for Cohealyx
Early clinical use of Cohealyx showed promising results, reducing hospital stays significantly, as highlighted by a case where a patient's hospital stay was reduced from a month to 1.5 weeks.
Lowlights
Revenue Shortfall in Q4 2024
Several top accounts chose not to finalize pending purchase orders by year-end due to cash preservation strategies, leading to a $3-$4 million revenue shortfall.
Increased Net Loss
AVITA Medical reported a net loss of $11.6 million for Q4 2024, compared to a net loss of $7.1 million in the same period in 2023.
Higher Operating Expenses
Total operating expenses for 2024 increased to $111.8 million from $86.4 million in 2023, primarily due to higher sales and marketing expenses and stock-based compensation.
Delayed Revenue Recognition
End-of-year purchasing patterns led to delayed revenue recognition, impacting Q4 financial results.
Company Guidance
During AVITA Medical's fourth quarter 2024 earnings call, they provided guidance for 2025, projecting commercial revenue to be in the range of $100 million to $106 million, representing a growth of 55% to 65% compared to 2024. The company anticipates generating free cash flow in the second half of 2025 and achieving GAAP profitability during Q4 of 2025. The guidance reflects contributions from new product launches, including RECELL GO mini and Cohealyx, which are expected to significantly impact revenue growth. Additionally, AVITA Medical plans to expand RECELL GO adoption and roll out PermeaDerm, with expectations of gaining CE mark approval for RECELL GO in the European Union by mid-year, further expanding their market opportunities. The company's focus remains on therapeutic acute wound care, and they aim to enhance clinical outcomes while reducing healthcare costs.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.