Analyst Jason Kolbert Lowers Price Target for AVITA Medical to $18.00

Jason Kolbert, a D. Boral Capital analyst, has lowered the price target for AVITA Medical (RCEL) to $18.00, a 5.26% decrease from the previous valuation. The change reflects Kolbert's assessment of the stock's current market position. AVITA Medical is a single-product company with a RECELL system that creates Spray-on Skin for burn treatment. The company has received approval in several countries and is focusing on the US market.

Valencia, Calif., Aug. 07, 2025 (GLOBE NEWSWIRE) — AVITA Medical, Inc. (NASDAQ: RCEL, ASX: AVH), a leading therapeutic acute wound care company, reported its financial results for the second quarter ended June 30, 2025, and adjusted its full-year guidance. The company's commercial revenue for the quarter was $18.4 million, representing an increase of approximately 21% compared to the same period in 2024 [1].

The net loss for Q2 2025 was $9.9 million, or a loss of $0.38 per basic and diluted share, an improvement from a net loss of $15.4 million, or a loss of $0.60 per basic and diluted share, in Q2 2024. Total operating expenses decreased to $26.1 million in Q2 2025 from $28.7 million in Q2 2024. The decrease is primarily attributable to a $2.0 million reduction in sales and marketing expenses and a $0.8 million decrease in general and administrative expenses [1].

AVITA Medical faced significant headwinds in the first half of 2025 due to a temporary gap in Medicare Administrative Contractor (MAC) payments to providers for the use of its flagship RECELL® System. This gap led to a weakening in demand. However, multiple MACs initiated payments in July, with resolution expected in Q3. AVITA also amended credit terms with OrbiMed, lowering revenue covenants and issuing AVITA common stock in lieu of a cash payment [1].

The company appointed Michael Tarnoff, MD, FACS, former Chief Physician Executive and CEO of Tufts Medical Center in Boston, and senior executive at Medtronic and Covidien, to its Board of Directors. Clinical highlights include RECELL reducing hospital stays by 36% in a real-world analysis of the national burn registry over five years and the Centers for Medicare and Medicaid Services (CMS) approving a New Technology Add-on Payment (NTAP) for the RECELL System when performed on trauma wounds in the hospital inpatient setting [1].

In light of these developments, AVITA has adjusted its full-year 2025 revenue guidance to a range of $76 million to $81 million compared to previous guidance of $100 million to $106 million. The company also expects to reach cash flow break-even in the second quarter of 2026 and GAAP profitability in the third quarter of 2026 [1].

David O'Toole, Chief Financial Officer of AVITA Medical, commented: "While we’ve revised our 2025 guidance, our long-term outlook remains intact. We’re pleased to have OrbiMed’s continued partnership and their willingness to accept equity in lieu of a cash fee reflects strong alignment with our long-term strategy and confidence in the value of the business we’re building. Regarding gross margin and gross profit, our gross margin percentage will decline, and gross profit will increase as revenue from PermeaDerm and Cohealyx grows. With our disciplined cost structure, together with stronger revenue expected in the second half of the year, we now anticipate reaching cash flow break-even and GAAP profitability in 2026 as reimbursement pathways stabilize and adoption progresses" [1].

References:
[1] https://www.biospace.com/press-releases/avita-medical-reports-second-quarter-2025-financial-results-updates-full-year-guidance-and-highlights-continued-clinical-innovation