Why the AVITA (ASX:AVH) share price is jumping 8% today

It has been a good day so far for this healthcare share…

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The AVITA Medical Inc (ASX: AVH) share price is on the move on Wednesday.

At the time of writing, the regenerative medicine company’s shares are up 8% to $5.40.

Why is the AVITA share price jumping?

Investors have been buying the company’s shares this morning following the release of its preliminary fourth quarter results.

According to the release, quarter to date, AVITA has realised total revenue in excess of its fourth quarter guidance range of US$8.2 million to US$8.6 million.

In light of this and based on the strength of both RECELL commercial revenue and BARDA related revenue, management is raising its guidance to be in the range of US$9.5 million to US$9.7 million.

This comprises US$6 million to US$6.2 million of RECELL commercial revenue and US$3.5 million of RECELL revenue associated with BARDA. The latter is the U.S. Department of Health and Human Services’ Biomedical Advanced Research and Development Authority.

The revised guidance for RECELL commercial revenue reflects a 55% to 60% increase over the prior year period and 30% to 34% increase over the third quarter of 2021.

The RECELL system is used to prepare spray-on skin cells using a small amount of a patient’s own skin. This provides a new way to treat severe burns, while significantly reducing the amount of donor skin required.

Management commentary

AVITA Medical’s Chief Executive Officer, Dr. Mike Perry, revealed that demand has been increasing after the US returned to relatively normal following the rollout of vaccines.

He commented: “As people begin to return to normal activities after the confines of the COVID-19 pandemic, we have seen an increase in burn accidents requiring treatment with the RECELL System in burn centers across the country.”

The AVITA share price is now up 7% since the start of the year.

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James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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