Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi MM Team, AVITA Medical Inc has felt like it has been trying to rally multiple times over the last ~6 months. It finally experienced a large spike earlier this month following a positive market update. What do you think of the result and where to from here for the share price? Thanks, Michael
Hi Michael,
For subscribers not familiar with AVITA Medical (ASX: AVH; Nasdaq: RCEL) it’s a $400mn medical technology company focused on burns, trauma and surgical wounds. Its core product, RECELL, uses a small sample of a patient’s own skin to create a spray-on suspension of regenerative skin cells, helping wounds heal while reducing the amount of donor skin required for traditional grafting. AVITA has also expanded into complementary wound-care products including Cohealyx and PermeaDerm.
Its business model is primarily recurring consumable sales to hospitals and burn centres. Hospitals use the RECELL processing platform and purchase single-use treatment cartridges for each procedure, meaning revenue grows as adoption and utilisation increase.
The stock has indeed bounced hard in recent weeks, but we must also caution it was trading ~$17, with a US$1.5bn market cap, a few years ago, i.e. it’s still ~80% below its highs even after surging almost 3-fold since its 2026 low. The stock has rerated higher of late reflecting a significant improvement in the operating and financial outlook.
The key catalyst has been the resolution of reimbursement uncertainty around RECELL, which had weighed on physician demand through late 2025. Improved reimbursement visibility has supported a recovery in utilisation, with RECELL revenue rising +11% sequentially to US$18.5m in 2Q26. The outlook improved further in July when CMS proposed moving RECELL to a more transparent national reimbursement framework from 2027.
The rally has also been supported by AVITA’s evolution from a single-product RECELL story toward a broader wound-care platform. RECELL GO mini is expanding adoption for smaller wounds, while Cohealyx and PermeaDerm are beginning to contribute incremental revenue, alongside RECELL’s expansion into Australia and New Zealand. At the same time, a new US$60m credit facility has refinanced existing debt and removed restrictive revenue covenants, materially reducing balance-sheet risk.
Overall, the re-rating reflects AVITA’s transition from a reimbursement- and funding-constrained medtech to a faster-growing, multi-product business with improving reimbursement visibility and a credible path to positive cash flow.
Take a free trial.
No payment details required.
Forgot password? Request a One Time Password or reset your password
One Time Password
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
A link to create a new password will be sent to the email address you have registered to your account.
Hi, this is only available to members. Join today and access the latest views on the latest developments from a professional money manager.
Our Smart Phone App will give you access to much of our content and notifications. Download for free today.
