AVITA Medical (NASDAQ:RCEL) Reports Mixed Q3 2025 Results, Cuts Revenue Outlook Amid Reimbursement Headwinds

AVITA Medical Reports Mixed Q3 Results Amid Reimbursement Headwinds

AVITA MEDICAL INC (NASDAQ:RCEL) reported financial results for the third quarter ended September 30, 2025, delivering a performance that fell short of analyst expectations on the top line while demonstrating significant progress in cost management. The company's update was met with a negative reaction in after-hours trading, reflecting investor concern over the revenue miss and a lowered full-year outlook.

Earnings and Revenue Versus Estimates

The company's quarterly results presented a clear divergence between its revenue performance and its bottom-line improvement relative to forecasts.

• Revenue: AVITA Medical reported commercial revenue of $17.1 million for the quarter. This figure represents a 13% decrease compared to the same period in 2024 and came in below the analyst consensus estimate of $18.5 million.
• Earnings Per Share (EPS): The company reported a net loss of $13.2 million, or a loss of $0.46 per share. This compares to a net loss of $16.2 million, or $0.62 per share, in the third quarter of 2024. While the company remains unprofitable, the per-share loss was wider than the analyst estimate of a $0.29 loss per share.

The primary driver behind the revenue shortfall was cited as temporary headwinds related to the transition to new Medicare reimbursement codes for its flagship RECELL System. The company noted that this created uncertainty for clinicians, which impacted procedure volumes during the quarter.

Market Reaction and Revised Outlook

The market's immediate response to the earnings release was negative, with the stock declining in after-hours trading. This reaction appears to be fueled by the dual disappointment of missing revenue expectations and the subsequent downward revision to the company's full-year guidance.

AVITA Medical now expects full-year 2025 revenue in the range of $70 to $74 million. This is a reduction from its prior guidance of $76 to $81 million and sits below the current analyst sales estimate for the full year of $77.4 million. The lowered forecast underscores the lingering impact of the reimbursement transition, despite management's assertion that the issue has now been largely resolved.

Operational and Financial Highlights

Beyond the earnings miss, the quarterly report contained several key developments that paint a picture of a company navigating short-term challenges while positioning for long-term growth.

• Improved Cost Discipline: The company achieved a 24% year-over-year reduction in total operating expenses, which decreased to $23.0 million from $30.2 million. This disciplined cost management contributed to a significant improvement in cash usage, with net cash used in operations falling to $6.2 million from $10.1 million in the prior quarter.
• Reimbursement Clarity Achieved: A critical milestone was the finalization of pricing for RECELL under new Category I CPT codes by all seven regional Medicare Administrative Contractors. Management expressed confidence that this removes a key barrier to clinician adoption and should support a normalization of procedure volumes.
• Strategic Focus and International Expansion: The company is concentrating its commercial efforts on approximately 200 high-value U.S. burn and trauma centers, representing an addressable market estimated at $1.3 billion. Internationally, the RECELL GO system received CE Mark approval, enabling a commercial launch in key European markets.
• Strengthened Financial Position: During the quarter, the company completed a private placement, raising $13.8 million net of expenses. It also secured a waiver and amendment for its revenue covenant with lender OrbiMed, providing near-term financial flexibility. Cash, cash equivalents, and marketable securities totaled $23.3 million as of September 30, 2025.

Conclusion

AVITA Medical's third quarter reflects a company in transition. While the quarter was marred by a revenue miss attributable to reimbursement delays, the underlying business showed resilience through aggressive cost-cutting and improved cash efficiency. The resolution of the reimbursement uncertainty is a pivotal development that the company will need to leverage to reignite growth and meet its long-term market potential. Investors will be closely watching the fourth quarter for signs that the operational execution and renewed commercial focus can translate into a rebound in revenue.

For a detailed look at future quarterly estimates and historical earnings data for AVITA Medical, you can review the earnings and estimates page.

Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.