The Avita Medical Inc (ASX: AVH) share price is skyrocketing today after the company released its financial results for a six month "transition period" ended 31 December 2021.
The company announced in December 2021 that it wanted to change its fiscal year from June 30 to December 31. That's why Avita is reporting for a six-month period today.
At the time of writing, the Avita share price is 23% higher at $3.16.
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Avita Medical share price surges as revenue spikes 37%
Key takeouts from the company's earnings results today:
- Revenue increased 37% to $14 million, compared to $10.2 million the same time last year
- Completed enrolment in two clinical trials with the goal of submitting premarket approval (PMA) supplements in 2022
- Received FDA approval of the PMA supplement for Recell Autologous Cell Harvesting Device
- Approved application for commercialisation of the Recell system in Japan
- $55.5 million in cash and equivalents at the end of the period
- $49.3 million in short-term and long-term marketable securities, with no debt.
What happened this period for Avita Medical?
The company recognised a 37% gain in revenue to $14 million, underscored by its Recell commercial revenues of $13.8 million. Recell is a system that allows medics to use a patient's own skin cells to produce 'spray-on' skin in the treatment of acute burns.
Avita also extended the shelf life of Recell and this led to a 300 basis point increase in gross profit margin to 86% compared with 83% last year.
It also saw a 7% increase in operating expenses due to "ongoing development of a next-generation automated skin preparation device, pre-commercialisation planning for Recell launches in soft tissue reconstruction and vitiligo, as well as increased hands-on professional education and training events".
The jump in revenue carried down vertically through Avita's P&L. The company's net loss decreased by $1.5 million to $14.4 million, helped by stronger margins as well.
As well, so far in 2022, the company has received approval of the PMA supplement for Recell in the US and was awarded an application for the commercialisation of Recell in Japan.
Management commentary
Speaking on the results, Avita CEO Dr Mike Perry said:
We are pleased with the terrific results that we are achieving with RECELL in US burn centres, as well as with our recent achievement of many key corporate milestones. Our success in burns will help us prepare for and is expected to increase our future adoption with respect to commercialisation in much larger markets for soft tissue reconstruction and vitiligo in the second half of 2023.
What's next for Avita?
Avita forecasts total revenues to grow by 20% year on year in CY22. It expects approximately $30 million at the top, with an additional $300,000 in contract revenues.
The company expects US BARDA contract revenues of approximately $0.3 million in 2022. That's down from $7.9 million last year, as several contract terms have been completed.
But the company is confident in its focus for the year ahead:
As we emerge from COVID-19, we expect further Recell adoption in US burn centers where we are focusing our commercial efforts. The adoption of Recell, and its positive patient outcomes and safety profile, positions us very well for broader commercial expansion planned for soft tissue reconstruction and vitiligo indications in the second half of 2023 following anticipated FDA approval.
Avita Medical share price snapshot
In the last 12 months, the Avita Medical share price has collapsed more than 44% and is down 9% this year to date.
However, during the past month of trading, the company's shares have soared 16% and, on today's results, are now more than 25% in the green this week alone.
