AVITA Medical Updates Expected First Quarter 2024 Revenue
- AVITA Medical revises Q1 2024 revenue guidance to US$11.0-11.3 million, below previous guidance of US$14.8-15.6 million.
- Full-year 2024 revenue expected at the lower end of US$78.5-84.5 million range.
- Challenges in new account conversions for expanded label of full-thickness skin defects cited as reason for revenue revision.
- 73 new accounts added since June 2023, with 71 submissions in evaluation stage as of March 31, 2024.
- Slower-than-expected conversion rate attributed to complexity of closing new accounts for product approved for multiple indications.
- AVITA Medical intensifying efforts to drive growth despite Q1 challenges.
- Company remains optimistic to meet lower end of annual revenue guidance range.
- Financial results for Q1 2024 to be reported on May 13, 2024, with a conference call scheduled on the same day.
- Q1 2024 revenue guidance revised downward due to slower-than-expected conversion rate of new accounts.
- Projected approval rate of 15 new accounts per month not met, impacting revenue expectations.
- Challenges in VAC process and timelines affecting account approvals.
- Despite efforts to drive growth, slower approval pace than anticipated remains a concern.
- Full-year revenue expected at lower end of guidance range, indicating potential challenges ahead.
Insights
AVITA Medical's announcement regarding its Q1 2024 revenue falling below initial projections raises concerns about the company's short-term performance. The downward revision from $14.8-$15.6 million to $11.0-$11.3 million suggests a significant shortfall, which may be indicative of operational challenges. Investors should be aware that such a shortfall could lead to volatility in the company's stock price as the market reacts to this unexpected development.
It's important to note that the slower conversion rate of new accounts, particularly for the expanded label of full-thickness skin defects, is a critical factor to consider. The complexity of closing new accounts for multiple indications might be resulting in longer sales cycles than anticipated. This could imply that AVITA Medical's sales strategy and market penetration efforts require refinement to better address the needs and decision-making processes of prospective clients.
Despite these challenges, the company's reaffirmation of its full-year revenue guidance suggests confidence in its product pipeline and market strategy. The launches of PermeaDerm and RECELL GO could potentially catalyze revenue growth in the coming quarters. However, investors should monitor the company's ability to convert its robust prospecting pipeline into actual sales, as this will be important for meeting the lower end of the annual guidance.
The regenerative medicine industry is marked by high growth potential and AVITA Medical's focus on wound care management and skin restoration positions it within a niche yet expanding market. The company's mention of a 'robust prospecting pipeline' and active submissions in the VAC process indicates a strong market demand for their products. However, the slower-than-expected approval rate points to a possible disconnect between product offerings and market readiness or the effectiveness of the company’s engagement with the VAC process.
Understanding the VAC process is important for companies like AVITA Medical, as it is a common hurdle in the healthcare sector that can significantly delay product uptake. The company's deeper understanding of this process, as mentioned by the CEO, could be a positive sign for future sales execution. However, the true test will be in their ability to navigate these complexities more efficiently moving forward and to shorten the sales cycle for their innovative products.
AVITA Medical's focus on regenerative medicine for wound care and skin restoration is a response to a growing need in the healthcare sector. The expanded label for full-thickness skin defects represents a significant advancement, but the slow conversion rate highlights the challenges associated with introducing innovative medical solutions into the healthcare market.
It's essential to consider the clinical and economic value proposition when introducing new medical devices. The VAC process, which evaluates the value of medical products, can be stringent, as committees critically assess the impact on patient outcomes and cost savings. AVITA's current situation underscores the importance of aligning product benefits with the expectations and requirements of healthcare providers. The company's ability to effectively communicate the value of its products and navigate the VAC process will be key to its success in converting submissions into sales.
VALENCIA, Calif., April 10, 2024 (GLOBE NEWSWIRE) -- AVITA Medical, Inc. (NASDAQ: RCEL, ASX: AVH), a commercial-stage regenerative medicine company focused on first-in-class devices for wound care management and skin restoration, today announced an update to its expected commercial revenue for the first quarter of 2024 and reaffirmed expectations for full-year 2024 revenue at the lower end of the previously provided guidance of US
For the quarter ended March 31, 2024, AVITA Medical now expects commercial revenue to be in the range of US
Since the launch of the full-thickness skin defects expanded label in June 2023 through the quarter ended March 31, 2024, AVITA Medical has added 73 new accounts, including 22 new accounts in the first quarter. In addition to the new accounts, there are 71 submissions in the evaluation or decision stage of the value analysis committee (VAC) process as of March 31, 2024. However, the projected approval rate was 15 new accounts per month, for an expected total of 135 new accounts by March 31, 2024. The slower-than-expected conversion rate is attributable to the complexity of closing a new account for a product that is approved for multiple indications. Despite this, the number of submissions active in the VAC process and robust prospecting pipeline continue to reflect significant potential for new account approvals, albeit at a slower approval pace than originally anticipated.
"In light of the challenges encountered in the first quarter of 2024, we are intensifying our efforts to drive growth," said Jim Corbett, Chief Executive Officer of AVITA Medical. "While our account conversion rate impacted our quarterly revenue, we remain optimistic for the full year. With the recent launch of PermeaDerm in March and the upcoming launch of RECELL GO, along with our deeper understanding of the VAC processes and timelines, we believe that we will meet the lower end of our previously provided annual revenue guidance range of US
AVITA Medical plans to report its financial results for the first quarter 2024 after the close of the U.S. financial markets on Monday, May 13, 2024. A conference call and webcast are scheduled for that day at 1:30 p.m. Pacific Time (Tuesday, May 14, 2024, at 6:30 a.m. Australian Eastern Standard Time) to discuss its results in further detail.
About AVITA Medical, Inc.
AVITA Medical® is a commercial-stage regenerative medicine company transforming the standard of care in wound care management and skin restoration with innovative devices. At the forefront of our platform is the RECELL® System, approved by the U.S. Food and Drug Administration for the treatment of thermal burn wounds and full-thickness skin defects, and for repigmentation of stable depigmented vitiligo lesions. RECELL harnesses the regenerative properties of a patient’s own skin to create 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. AVITA Medical also holds the exclusive rights to market, sell, and distribute PermeaDerm®, a biosynthetic wound matrix, in the United States.
In international markets, the RECELL System is approved to promote skin healing in a wide range of applications including burns, full-thickness skin defects, and vitiligo. The RECELL System is TGA-registered in Australia, has received CE-mark approval in Europe and has PMDA approval in Japan.
To learn more, visit www.avitamedical.com.
Forward-Looking Statements
Statements in this announcement may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements generally may be identified by the use of words such as “anticipate,” “expect,” “intend,” “could,” “may,” “will,” “believe,” “estimate,” “look forward,” “forecast,” “goal,” “target,” “project,” “continue,” “outlook,” “guidance,” “future,” and similar words or expressions, and the use of future dates. Forward-looking statements in this announcement include but are not limited to statements concerning our product development activities, regulatory approval of our products, the potential for future growth of our business, and our ability to achieve financial goals. These statements are made as of the date of this announcement, and the Company undertakes no obligation to publicly update or revise any of these statements, except as required by law. For additional information and other important factors that may cause actual results to differ materially from forward-looking statements, please see the “Risk Factors” section of the Company’s latest Annual Report on Form 10-K and other publicly available filings for a discussion of these and other risks and uncertainties.
Authorized for release by the Board of Directors of AVITA Medical, Inc.
FAQ
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