Good afternoon, and thank you all for joining us this week at the JPMorgan Healthcare Conference. My name is Andrew Liang, and I'm an associate here on the JPMorgan Healthcare Investment Banking team. It is my pleasure to introduce AVITA Medical and its CEO, Cary Vance. We'll have a short Q&A session afterwards, but Carrie, turn it over to you.
Thank you, Andrew. Good to be with you all this afternoon. I've been involved with AVITA Medical for about three years. I joined the board three years ago and then became CEO three months ago, so the reason why I joined the board, the reason why I love being a part of AVITA, is the mission that AVITA has. We're all about patient care. We're a patient-centric, customer-centric organization. I think you'll see some of that. I've been involved in a lot of different companies where we try to change healthcare and bring new standards of care to patients. In order to do that, we really need to check a few boxes. One is obviously clinical data, clinically driven innovation. Logistically, workflow-wise, it needs to work for our customers, and then ultimately, there needs to be an economic benefit to them as well.
And so I think we tick all those boxes. You'll see that as we go through the presentation. Our customers and our patients depend on us in their worst times. We usually care for patients on their worst days. And that's illustrated. We are just dipping our toe in the water in Europe in terms of our expansion and just started that here in Q1. And really out of the box with the Swiss nightclub fire, we found dozens and dozens of burned patients sent to different countries in Europe. And we've been more than happy to respond to that and have kind of answered the call for clinicians who are trying to treat those patients. And we've done that and continue to do that this month. Forward-looking statements, obviously things can change. Please reference our SEC filings. We're a therapeutic acute care company.
So we operate in the hospitals, and we're procedure-driven. Same patient, same hospital, same doctor, with a few different products that we offer for wound closure, for surgical repair, for burn. And you'll see that. We're all about bringing value, clinical value, economic value to our patients, or to our customers and their patients. And again, I think we'll talk about that as we go. 40,000 hospitalized burned patients every year. It's a large number, and still very few of those are getting, I think, the best standard of care, which is our RECELL product line. Along with RECELL comes a number of clinical benefits, but also economic benefits and a reduction in complications. Some of those economic benefits are in the form of reimbursement and some in terms of cost savings that come from reduced length of stay and reduction in complications. This is our product line.
We have RECELL and RECELL GO, RECELL Micro. RECELL Micro is exactly what you would expect. It's a smaller version for smaller wounds, but RECELL GO and RECELL has been around for a good period of time, a number of years, and it basically converts a small sample of a patient's skin into a larger coverage area for spray-on skin and healing. We've added CoHelix in the last year or so, which is a dermal matrix that allows for vascularization of the wound and preparation of the wound bed, and then PermeaDerm is a transparent biosynthetic dressing for temporizing the wound and for covering the wound. It has a unique quality that it's transparent, allows them to see the wound bed and how it's progressing and healing. This is an illustration of how you can use the products by themselves or in combination.
Essentially, PermeaDerm can be a temporary dressing, basically to cover the wound until they figure out what they're going to do. It also is used in combination with RECELL. So after you've treated the wound with RECELL, you can put PermeaDerm over the top to aid in healing. And then, of course, with a full-thickness wound, you can use all three products in combination to prepare the wound bed, get closure, and get healing and great outcomes for the patient. Again, PermeaDerm, we're all about speed, speed to healing. So speed to healing is good for the patient, good for the clinician, good for the hospital. So the sooner they can get out of there, the better chance that they won't have complications, things like infections and so on.
If those of you that aren't familiar with RECELL, one of the advantages is that you take a very small donor sample. So a lot of times, patients complain that the donor site is more painful and destructive sometimes, even than the wound itself. You can take a credit card-sized sample, and you could use that to spray and treat the patient's whole back if you wanted to, about an 80 to 1 ratio of the sample and its application. We're a very data-driven, very clinical-driven company, both in terms of the data we generate in clinical studies, but also how we train and prepare our clinicians and customers to treat. It's about speed. In the case of CoHelix, it can be ready to graft within about a week or so, as opposed to with some competitive products, it can be up to three weeks.
And so those that want to graft quickly, CoHelix has a great advantage in that regard. From an economic standpoint for us, as we have, again, same patient, same hospital, same physician, products can be used independently and distinctly, but also in combination. You see that that makes a difference in terms of revenue dollars kind of per patient, per wound. So if you use PermeaDerm by itself, RECELL and PermeaDerm, and then all three, you can see the economics of it per patient and revenue. And this example is a 20% TBSA. For our company, there's a large addressable market, $1.3 billion. That's really comprised of the 200 key sites, the grafters in this country, the 120-130 burn centers, the 50-60 level one trauma centers. That's where we're focused. I think it's important for our company to focus in 2026.
You'll hear me say the word execution quite a bit. We've done a lot of work around reimbursement, a lot of work in the regulatory space, a lot of work in partnerships and preparing for 2026. And then we've had some headwinds that I'll talk about, but essentially, we're all about execution in 2026 and focus. And our sales team is focused on those larger accounts. And while we have relationships at 90% of those accounts, we're really only penetrated about 5% across the three products. Even within RECELL, it's around the 15% range. And so we have a lot of work to do in the existing accounts that we have.
So while we'll drive RECELL growth and kind of introduce and drive CoHelix and PermeaDerm through the VAC process, it's on us too to train and to sell, even coming out of the VAC process, our customers on CoHelix and PermeaDerm. What we're also doing, as I said, is we're in Australia, we're in Japan, we're in a handful of countries in Europe. And so we're just starting early days. We have approval there, and we're moving through some distribution networks in Europe to make some headway. And this unfortunate event in Switzerland has really brought notoriety to the product to some degree. And so while we help them, I think the opportunity for us to help on a more regular basis outside of that event, I think will happen during the course of this year. As I said, it's important for us to be a data-driven company.
It's important for us to tick all those boxes to be successful in hospitals. Again, improved clinical outcomes, shorter hospital length of stay. So we're reducing time in the ICU, et cetera. Reimbursement, obviously, with every med tech company is crucial. Not only the amount of reimbursement, but the reliability of reimbursement, the predictable nature of them getting paid. We have Category I CPT code, but the adjudication of those claims and the execution of that code has been difficult in 2025. CMS pushed that to the max, the Medicare Administrative Contractors, and then they have been somewhat slow to actually publish those rates, and so right now, as we sit here in January of 2026, four of the seven have published. The other three are promising publication by the end of January.
And so our job as a company is to educate our physicians and our customers as to how that's moving along, how they can count on those payments coming soon, because it's somewhat disrupted our progress in 2025, as you might expect. When physicians all of a sudden aren't getting paid, they let us know and they change their behavior. And so we're in the process of fixing that. We have two post-market studies in process. We have a CoHelix one study, which evaluates the ability to prepare the wound bed and the readiness for closure. So that is fully enrolled. We have PermeaDerm, which looks at cost reduction as a result of using it versus allograft. That's 75% enrolled. So because they're post-market studies, I would expect that the data that's coming out of that to kind of be shared throughout the course of the year.
And a lot of that will be finalized towards the end of the year. We have an opportunity at Boswick conference in a couple of weeks. We've got 19 abstracts there at the American Burn Association in April. We've got 14 abstracts there. So we'll be sharing that clinical data with those in attendance. Again, this is length of stay and it's real dollars. I think some of the data that we've shown is on average, or as an example, it can save them up to $42,000 in five fewer days in this example. So it's a 36% reduction in length of stay. Not only does it save them money when they're out sooner, but it opens up beds and that restriction that comes with it. Behind every data point is a patient. This is an example of a patient who tried allograft and it failed.
You can see not only the effectiveness of treating that wound, but the pigmentation that comes a year out, which is pretty impressive with just treatment of RECELL alone. The company itself was on a pretty strong growth trajectory, and we ran into a handful of headwinds last year. One is this reimbursement uncertainty piece in terms of physician payments. The second is CoHelix getting stuck in the VAC process, right? So that's all we've been working through that. We also kind of restructured our sales force to focus on those 200 sites. With that comes some disruption itself. And so you see we're on a 29% CAGR over time. And so what we see in 2025 is there was growth, but it was modest growth. And what we see is we're going to return in 2026 to the kind of trajectory we were on before.
And so we pre-announced our guidance of $80 million-$85 million in 2026, and we expect to get back on track that way. We also pre-announced or announced yesterday morning a refinance of our debt. So we had an existing debt structure that we refinanced with Perceptive Advisors. We added some dollars to our balance sheet, but more importantly, we worked with them on, I think, more friendly terms in terms of revenue covenants and cash covenants that are more in line and gives us a buffer throughout the year. I mean, I think that any of you know, as a leader of a company, you're trying to remove distraction. You're trying to simplify so we can execute. And so this debt facility we had prior was every quarter we were bumping up against it, and it was causing a lot of extra work and a lot of distraction.
We've solved that through our partners at Perceptive Advisors. So those are the terms of the deal. Again, those revenue covenants are well within our guidance, and expectation is those won't be an issue from quarter to quarter. And I know that they, nor I, want it to be an issue. So again, it gives us some working capital as we grow our revenue, as we manage our cash. It's not something that we're going to have to worry about here in 2026. Again, in summary, I think it's important to have a great product. I think that, yes, we have a quality sales team. Yes, we have focus. We're focused on execution. We have a portfolio now of products, but I think RECELL is a flagship product like no other.
I know that over the last few months, I've visited with physicians, and I've never seen a product that they love so much and a company that they're rooting for so much as RECELL and the impact that it makes on clinicians. And this is an industry in burn that's very close-knit, very passionate, and they care quite a bit about their patients and that whole continuum of care. And I think RECELL gives them a vehicle to really help and give them a gold standard of care. Again, we have to address the financials with hospitals ever more. It's important. And so because of that, we've got a reimbursement where we need it to be. And progressively, over the next quarter or two, we will see that completely come online.
I think from a length of stay and managing their own costs, we're helping them do that, both in terms of the 36% reduction in length of stay through RECELL, but also through the time to graft with CoHelix. We're focused on a couple of hundred sites. And because of that, we have the very best sales force to do that, and they're very focused on the accounts that they're already in. And that's why, even though it's a bit of a high touch where they're in there, they're in there with procedures. They have the relationships while they're in there. They're selling to physicians. They're expanding broad and deep to different types of procedures, different size wounds, different physicians that haven't used it in the past. So we're selling within the relationships we already have, and there's a level of trust that allows us to do that.
Again, CoHelix and PermeaDerm, while we've launched them a year or so ago, they've been in that committee quite a bit. And we have champions that have put them there. And as they come out, those same champions are going to make sure they're used and that we benefit from it as a company as well. And we're responsible in our cash management and our cost structure. We have reduced our costs and our spend in 2025. And we've done it in a very responsible, thoughtful way, strategic way, because we realize that we also need to be positioned to grow. And so we feel really comfortable with where we're at. And over the next couple of years, as we grow, we don't feel like we're going to have to spend any more money to do that, and we'll be able to handle it. That's it. Thank you.
Great. Thank you, Carrie. A handful of questions for you. The first, you recently pre-announced financials and provided 2026 guidance, which you touched on very briefly. What underpins your confidence in growing from roughly $72 million in 2025 to $80-$85 million in 2026?
Yeah. I mean, I think just by way of background, I'm a commercial leader, right? So I mean, I've spent most of my career trying to understand and be predictable. And I think that this is a bottoms-up number. I mean, I think as much as the company wants to show a certain amount of growth, this all comes from the field. It comes from each account, each territory, understanding which physicians are using it, which products they're using, how soon we think they'll adopt, what types of procedures we think they'll use it for, at what cadence. When you have a renewable business, it's important to take into account when they start, because if they start buying in October versus February, you're going to miss out on six months or so of revenue.
I feel like it's very bottoms-up, very realistic, taking a lot of different things into account: volume, time, how long they're in the VAC committee, how long it takes after it comes out of the VAC committee to start using it, start buying it. I'm measuring utilization, and that'll be a key factor and a precursor for revenue going forward. It gives me a lot of confidence. Having spent the last three months, having gone through at least partial fourth quarter, which we announced $17.6 million in revenue, I know where that $17.6 million came from. I could have told you before Thanksgiving that's where we're ending up. I don't think we could do that before. I think we're getting very predictable in that way. I think that we've evened out. We understand how our customers use it, but we also understand how they buy.
And the consistency and the organic nature and the steady nature in which they buy helps us to understand our baseline predictability. And then obviously, we need to drive that number up.
Great. And I know you touched on that predictability right there at the end. Has there been anything that's changed in the business, or what has changed in the business that gives you greater confidence in the predictability of your revenue today?
Yeah. I mean, I think getting really good at forecasting, being predictable, building credibility, it's kind of people, process, and an overall understanding. So number one, it's the people trusting management. It's people forecasting, telling you actually what's happening on the ground. And then having a process. I mean, we have a sales operations team that does modeling where we're weighting certain numbers differently in month one, month two, month three. And so I just think all of that is coming together, and we're becoming very predictable. I could probably tell you within a few hundred thousand what we're going to do in Q1 even. We're getting really good at it. And that's kind of step one, because I think the company not only didn't perform as well as it could have in 2025, but the expectations were too high out of the gate.
Actually, as the quarter went on or as the year went on, I think there was a feeling like we didn't know how we were going to end up or what was happening out there. Some of it was the clunkiness of the orders and the larger buys, and then some of it was just the unpredictability of reimbursement and other things. We are really good at that right now. Now it's a matter of turning up the throttle and getting performance on track.
That's great to hear. Where are you most focused commercially in 2026 to drive that consistent execution and scale?
Yeah. I mean, I think focus is everything. I mean, yes, we're in these handful of countries. Yes, we're kind of pressure testing the economics, the distribution networks, and so on. So yes, we're international, but we are not a company that says, "Don't look at our core business. Look over what we're doing here or there." We are focused on the U.S.. We are focused on our kind of existing 200 accounts. We are focused on our people, making sure they're properly incentivized, that they have the right kind of quotas, the right comp plan, the right messaging, the right product line in their bag. And so it sounds really boring, but sometimes it is. Sometimes it's as simple as that. It's not easy, but it's simple. And that is we are about focus.
We are about execution, about simplicity, about removing distraction and noise and letting our people sell great products to the customers that want to buy them.
Great. And switching gears a little bit, how should investors think about cash use as you move through 2026?
Yeah. I mean, I think we're going to be set for cash use. I mean, I think obviously, as the revenue line grows, that helps us with cash. I think we have enough cash. We added some to the balance sheet. I think we're going to get closer and closer in the coming period of time. We're not kind of forecasting when we'll be profitable, but I think we're getting better and better at cash. We reduced cash burn last year in the latter quarters. I think you'll continue to see us holding steady. Really good cash management, really good thought around spend, around our investments. Like I said, we are positioned to grow. And so if you see our revenue line go up, you're not going to see the company having to spend millions and millions more dollars to make that growth happen in 2027 even.
I think we're positioned for that. And you can see a really consistent cash management structure.
Great. Maybe just one more from me, and then we'll open it up to the audience to see if anyone has any questions. But what are the key milestones investors should watch this year to gauge progress against your strategy?
Yeah. I mean, I think clinically, you're going to look at some of these clinical studies, some of the progress that we're making with key KOLs. You're going to see some of the data that comes out of it. So some of that's clinical. Some of it's the buzz that comes out in the marketplace, but ultimately, this is about revenue, but before you can get to revenue, it's about utilization, and so my KPIs will be all about utilization because that is a precursor to the revenue coming, so I'm tracking on a daily, weekly basis who's using it, what new physicians have come on board for which products, what new types of procedures they're using it on, kind of account by account, how we're growing within that account and within physicians and within procedures, and so it's that simple.
I mean, I think there are a lot of things that have occurred in the past from a regulatory reimbursement standpoint, but I think investors just need to look at revenue because I believe that the jury's out based on how the last year has gone as to whether or not this is flat or whether it's growing, and I think they should expect it to grow sequentially, quarter- over- quarter, and more than anythng, that's going to be an indicator of the progress we're making.
Great. At this point, we'll open it up to the audience if there are any questions. Hearing none. Carrie, thank you so much for the great presentation.
Thank you, Andrew.
Thank you all for joining us.
Thanks, everyone.