Good day, and thank you for standing by. Welcome to AVITA Medical First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please note that today's conference is being recorded. I would now hand the conference over to your first speaker for today, Jessica Ekeberg. Please go ahead.

Thank you, operator. Welcome to AVITA Medical's first quarter 2025 earnings call. Joining me on today's call are Jim Corbett, Chief Executive Officer; and David O'Toole, Chief Financial Officer. Today's earnings release and presentation are available on our website, www.avitamedical.com under the Investor Relations section. Before we begin, I'd like to remind you that this call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results to differ materially from any expectations expressed or implied by the forward-looking statements. Please review our most recent filings with the SEC for comprehensive descriptions of the risk factors. Any forward-looking statements provided during this call are based on management's expectations as of today. I will now turn the call over to Jim for his comments.

Thank you, Jessica. Good afternoon to those joining us here in the US, and good morning to our colleagues and investors in Australia. We entered 2025 stronger, sharper and more strategically prepared than ever before. There's more to do, but the foundation we've built gives us the opportunity to accelerate and deliver against the full potential of our expanded platform. Let's turn to slide 3. We are no longer a single product run-only company. Today, we are a fully integrated, multi-product platform positioned to lead in therapeutic acute wound care. With this transformation, our US addressable market has expanded from roughly $500 million to more than $3.5 billion annually. That's a seven-fold increase that materially reshapes our long-term growth trajectory. Revenue for the first quarter increased 67% over the first quarter of the prior year. It's a strong indicator of the traction we're gaining. We see the quarter as a launch readiness phase, gearing up to fully reignite our growth in Q2 and beyond, powered by a portfolio that is now fully ready to scale. Let me walk you through how our expanded portfolio has come together and how we're positioning the organization to capitalize on it effectively. In February, we launched RECELL GO mini, a targeted innovation designed specifically for trauma centers, treating smaller wounds. Let me step back for a moment and explain why we've created it. Our original RECELL system was developed to treat large burns, covering up to 10% total body surface area or about 1,920 square centimeters. However, data from our pivotal trial to support our pre-market approval of full-thickness skin defects for trauma and early market observations made it clear that most traumatic wounds are significantly smaller, typically well under 480 square centimeters, or less than 2.5% total body surface area that is treated by RECELL GO mini. In fact, during our PMA trial for non-thermal skin defects, the wound area treated was less than 2.5% total body surface area. What that told us is that outside of burn centers in trauma and surgical settings, wounds requiring grafting are predominantly smaller yet our standard RECELL kit was optimized for much larger wounds. Enter RECELL GO mini. Same RECELL GO multi-use processing device, same procedural consistency, same clinical benefits but with a disposable cartridge optimized for trauma cases covering wounds up to 480 square centimeters. It is a purpose-built solution informed directly by real-world clinical needs and designed for optimal integration into trauma workflows. RECELL GO mini unlocks the trauma market of approximately 270,000 cases annually in the United States. The early feedback has been encouraging and we're already seeing adoption. We also launched Cohealyx, our collagen-based dermal matrix nationwide on April 1, 2025 in all sizes, following a successful limited release during Q1. For those new to the story, last quarter we shared a standout case that took place at the Ohio State University Wexner Medical Center. In that case, a 67-year-old woman with a third-degree burn was treated under physician direction using Cohealyx as part of the treatment protocol. By day seven, her wound had progressed to a point the physician deemed ready for grafting. She was discharged within 10 days. According to one of her clinicians, had she been treated with an alternative dermal matrix, her hospital stay would likely have extended to a month. Her treating physician also noted that Cohealyx not only reduced the time the patient spent in the hospital but he believes it could allow physicians to treat more patients due to how easy it was to use in the operating room. In fact, the surgical team described Cohealyx as a welcome addition to their toolkit and emphasized its compatibility with their existing protocols. These initial experiences reflect the kind of clinical feedback we're hearing as adoption expands and is exactly the type of outcome other centers are looking for as they evaluate integration into their protocols. Cohealyx is now available in multiple sheet sizes including a large-format 700 square centimeter sheet. Importantly, three large-format sheets cover the treatment area of a typical RECELL burn case of 1920 square centimeters, enabling full coverage of the wound. To facilitate adoption and stocking, we are deploying Cohealyx through an RFID-enabled consignment model that streamlines hospital inventory management and ensures traceability to address important financial and regulatory considerations. In parallel, we have fully implemented the manufacturing of PermeaDerm, our biosynthetic dressing under our roof at our state-of-the-art facility in Ventura, California. Alongside this, we have amended our distribution agreement with Stedical Scientific. This strategic move delivers cost efficiencies, scale, and a larger revenue share of the average selling price. 60% of the revenue goes to AVITA, up from 50%. With these additions, our commercial lineup now includes RECELL Ease-of-Use, RECELL GO, RECELL GO mini, Cohealyx, and PermeaDerm. This is the first time we've had such a broad spectrum of products available to support both burn and trauma centers with one broad integrated portfolio targeted at the same hospital, same doctor, the same patient and the same wound. This matters because hospitals are looking for integrated scalable wound care solutions that solve more and more of their wound care needs. AVITA Medical provides that now. Slide 4 shows what that means in terms of potential revenue per case. As hospitals adopt across our portfolio, we expect the realized average selling price per case to rise meaningfully. Now, to support our portfolio transformation, we needed to evolve our commercial model to match. This required a significant shift in our commercial approach. Historically, our reps provided heavy service-oriented case-based procedural support, meaning our clinical specialist staff or sales reps would be physically present for many RECELL cases. That model served us well during the initial introduction of this first-in-category product when we were a burn-only single product company. With the launch of multiple products and a more complex call point, we need to evolve our sales model. Robin VanDenburgh, who joined us last August, led a full evaluation of our commercial organization. Under her leadership, we've redesigned the model, shifting from a service-oriented case-based support structure to a more focused selling-oriented approach. Our reps still cover cases but within a standard two-stage workflow for a full-thickness case typically around 10% total body surface area, they're now actively selling at multiple points throughout the two procedures. In Stage 1, they're introducing and selling the dermal matrix. Then in Stage 2, they're selling RECELL with split-thickness skin graft and closing the graft with PermeaDerm. Here's an overview of the changes we've made. We consolidated from 12 regions to nine regions. We reduced our total field headcount from 108 to 82. We have transitioned most clinical specialists into commercial roles preserving critical product knowledge while expanding our commercial reach. We didn't lose expertise; we redeployed our expertise. Now our sales reps are spending more time on conversations that drive adoption across the entire portfolio while still covering cases. We've realigned incentives accordingly. We will continue to have a small single-digit number of clinical specialists, generally assigned to our largest customers. As part of this evolution, we evaluated every program in the company, creating meaningful efficiencies. Overall, we expect to save $2.5 million per quarter in operating expenses and improve operating margin, all while increasing our selling capacity. Of that, approximately $1.3 million comes from the commercial transformation with the remainder from G&A and R&D savings. We also strengthened leadership in the process. Laura Ackerman has stepped into one of our two area Vice President of Sales roles reporting directly to Robin. It's the right team at the right time to meet the moment. Meanwhile, we're seeing reimbursement support continue to build. Earlier this month, CMS proposed a new technology add-on payment known as NTAP for RECELL. If approved, the policy could take effect on October 1. We're optimistic and we're actively engaged in the public comment process. As for vitiligo, our clinical studies were accepted for publication in March and the results met our expectations. That said, the reimbursement landscape remains highly uncertain. As a consequence, we are stepping back from further commercial investment in the vitiligo indication at this time. Our focus remains squarely on acute wound care, where we see the greatest and clearest opportunity. Let me end by looking ahead. We've come a long way. Two years ago we were focused solely on burns addressing a $500 million market opportunity. Today, with a broad acute wound care portfolio, our addressable market is in excess of $3.5 billion in the US alone backed by a scalable commercial model, integrated operations, and expanding reimbursement support. Our future is bright. On May 13, we will bring this story to life at the AVITA Medical Acute Wound Care Showcase 2025. We'll share clinical results by some of our treating physicians, economic insights, and we will hear how our products have changed patients' lives. You'll be hearing directly from the physicians and patients whose lives they've helped heal. I hope you'll join us. You can register by visiting our website, clicking the Investor Relations tab and selecting the Events section. With that, I'll turn it over to David to walk through our financial results.

Thank you, Jim. For the three months ended March 31, 2025, our commercial revenue was $18.5 million, representing a 67% increase compared to the same period in 2024. This growth was driven primarily by the continued deployment and ongoing adoption of RECELL GO within existing burn centers as well as expansion into new accounts targeting trauma centers. We acknowledge that we have had two quarters where our revenue has been flat. However, as Slide 5 shows, over the last five years our growth has been impressive with approximately 47% compound annual growth rate through the end of 2025, assuming the midpoint of our revenue guidance for this year. As Jim indicated, we are on the precipice of recharging this historical growth rate in the coming quarters. Early indicators from the February launch of RECELL GO mini and April launch of Cohealyx continue to suggest that these products will meaningfully contribute to revenue growth throughout 2025 alongside the increasing momentum from PermeaDerm sales. Gross profit margin for the first quarter was 84.7%, down from 86.4% during the same period of 2024. Note that the gross margin for RECELL products only was 86.4% for the quarter, which we believe will remain in this range for future quarters. The decrease in the overall gross margin percentage from the prior year was primarily caused by volume discounts, a higher inventory reserve, and product mix. As the percentage of our revenue derived from new products increases, we will continue to see a small degradation of our overall gross margin percentage while increasing our gross margin dollars and operating dollars. As we have disclosed, we share the average sales price for Cohealyx at 50%, and for PermeaDerm at 60%. These distribution arrangements are highly beneficial to us. However, it is inevitable because of the revenue-sharing nature that our overall gross margin percentage will decrease from historical levels. Total operating expenses for the quarter totaled $27.5 million compared to $26.8 million in the same period of 2024. This increase stemmed from a $2.2 million rise in sales and marketing expenses due to employee-related costs, including increases in salaries, benefits, and commissions, partially offset by a decrease in professional fees. G&A expenses decreased significantly by $2.6 million or 29% driven by lower salaries and benefits, deferred compensation, professional fees, and corporate expenses. R&D expenses increased by $1.1 million as a result of higher salaries and benefits, stock-based compensation, partially offset by lower outside professional fees and other expenses. Notably, due to our recent commercial field transformation and additional operational efficiencies we have implemented, we expect to reduce our operating expenses by approximately $2.5 million per quarter on a go-forward basis. We expected total operating expenses to increase in the first quarter compared to total operating expenses of $26.1 million in the fourth quarter of 2024 due to the reset of payroll taxes, benefits, and other typical first quarter expenses. The $27.5 million of operating expenses in the first quarter include non-cash expenses of approximately $2.7 million of stock-based compensation expense and approximately $0.4 million of depreciation and amortization. Other income expense increased by $0.7 million to $0.8 million of expense for the quarter consisting of non-cash charges totaling $1.1 million related to changes in the fair value of debt and $0.5 million of associated debt costs, partially offset by a $0.4 million non-cash gain from the change in the fair value of warrant liabilities and $0.4 million in investment income. Net loss for the first quarter was $13.9 million or a loss of $0.53 per basic and diluted share improving from a net loss of $18.7 million or a loss of $0.73 per basic and diluted share in the same period in 2024. As of March 31, we had cash and marketable securities of $25.8 million compared to $35.9 million at December 31, 2024. Although we expected our cash usage to increase in the first quarter due to the payment of bonuses and commissions as well as the reset of payroll taxes and benefits, the $10.1 million use of cash was higher than we had anticipated. As discussed earlier, we have taken the necessary steps to reduce our use of cash in the coming quarters by eliminating approximately $2.5 million of operating expenses per quarter. We remain confident that our current cash balance will allow us to achieve our plan which includes generating free cash flow in the second half of the year and achieving GAAP profitability in Q4 of this year. Turning to our OrbiMed credit facility. At the end of March, we secured a waiver of our first quarter trailing 12-month revenue covenant, which had been set at $73 million. To obtain this waiver, we paid a fee to OrbiMed. Revenue covenants for future quarters remain intact with the second quarter 2025 trailing 12-month revenue covenant set at $78 million. It is worth highlighting that we have assessed potential implications of current tariff policies and can state the current slate of tariffs will not have a material impact on our business. Looking ahead, we reiterate our full year 2025 commercial revenue guidance of $100 million to $106 million, representing growth of approximately 55% to 65% compared to 2024. Additionally, we continue to expect to generate free cash flow in the second half of the year and achieve GAAP profitability during Q4 of 2025, supported by our operating efficiencies as well as the broader scaling of our commercial portfolio. We remain confident in the success of RECELL GO, the full commercial launch of Cohealyx, the rollout of RECELL GO mini, and the growing adoption of PermeaDerm. These strategic initiatives position us to deliver strong results this year and drive significant shareholder value. Lastly, as a reminder, our Annual Meeting of Stockholders will be held on June 4. We encourage all stockholders to participate and cast their votes. With that, I will turn the call back to the operator for your questions.

Thank you. Our first question coming from the line of Brooks O'Neil with Lake Street Capital Markets.

Good afternoon, everyone. I guess I'll start. I have a sense that you've said a limited commercial launch of Cohealyx occurred in Q1. Can you share anecdotally any response, impressions, performance you've witnessed of that product and what it says to you about the pending full launch that's occurring now?

Sure, Brooks. Thanks for the question. So first of all, you may recall that the preclinical work demonstrated a graft readiness at seven days, which is quite almost seven to 14 days faster than other dermal matrices that we studied in that same preclinical work. What we experienced in the limited market release was really us gathering case data to help support commercialization. April 1 is when we actually validated that experience. And there was a case that's in the news put out by Ohio State, where they had a seven-day graft-ready experience with Cohealyx. And it is consistent with a couple of dozen cases that we did there in Q1. In Q1, we didn't have a broad full SKU array of sizes, so we were limited to treat certain number of cases. On April 1, we were fully stocked, including the 700 square centimeter sheets. So we're fully ready to go. The third thing is Cohealyx in our post-market study is in the majority ready to enroll. They've been through IRB, and right now, they're screening patients and preparing to enroll. So during the year, we'll get access to that data as well. Since that time, we've had a number of early commercial adoption cases where they've been through VAC already, shorter than we were experiencing, frankly, with RECELL GO times. So we're really excited about how Cohealyx is going. The organization is trained. And as you heard, we reconfigured the sales organization as well because, of course, Cohealyx gets sold at the first stage of a two-stage procedure. We want our reps there as well as when RECELL GO or RECELL GO mini is being used with a split-thickness skin graft. So, a lot of info. Sorry about that, but there's a lot to say about Cohealyx.

Great. That was very helpful, Jim. The other question I want to ask is just, obviously, RECELL GO mini and the expansion of the product into the Level 1 and Level 2 trauma centers. I'm curious if you could give us just any sense for whether that's working and what the response is.

First of all, even though the product was approved at the end of December, we received our first inventory in early February, which was when we began promotions. We have seen a fairly good response from existing VAC approved accounts in the trauma sector that we converted last year and who have taken inventory for RECELL GO mini. It’s important to note that most of these patients fall well within the 2.5% total body surface area covered by RECELL GO mini, which is 480 square centimeters. The response has been positive, and additionally, we have observed that with our current product portfolio, including PermeaDerm, Cohealyx, and RECELL GO mini, there are more opportunities to deliver value to trauma surgeons. This is positively impacting our sales activities.

Great. Thank you very much. I'll jump back in queue.

Thank you. Our next question coming from the line of Josh Jennings with TD Cowen. Your line is now open.

Hi. This is Eric on for Josh. Thank you guys for taking the question. Thank you for all the commentary on Cohealyx. That's very helpful. And it sounds like that rollout is off to a nice start. I was hoping we could talk about any potential revenue contributions from that launch that we should be assuming within the guidance for 2025. And maybe beyond that, just wondering if you have any target attachment rates that you're working towards where folks are using Cohealyx in concert with the RECELL platform.

That is a good question. We're not quite ready to give guidance on that mix. I will tell you, it is expected by us to be a material contributor. We think in fact, it is likely that by Q3 that we'll be breaking out the non-RECELL sales as a consequence, just to give you some directional guidance, if that's helpful.

That is, yeah. Thank you for sharing that. And maybe secondly, just thinking about the sales force here, just looking at where revenues need to be by the end of this year to reach guidance. I was just wondering if you think you have the sales force in place now to reach those targets or if that's something that needs to be looked at at some point here?

No. Actually, we feel very good about our staffing level. We reconfigured because if you recall, we were structurally, I think, at 59 sales positions and 29 clinical specialist positions. Those clinical specialist positions were attached to sales reps, right? And the model very much was heavily a sales service model. In a two-stage procedure, the clinical specialists, not the sales reps would be present. During the initial stage, there was no explicit reason why our rep would be present. So what we did is we have a number of very large accounts where we kept the clinical specialist model. We converted the roles of clinical specialists into a essentially a sales associate level, we call them market development specialists, but they have a sales role. Now our sales coverage is about approximately 70 and their goal is to be a selling team that is in Stage 1 of the procedure when a dermal matrix is potentially used and then to also be there when the split-thickness skin graft is used with RECELL, and be there when the dressing that could be PermeaDerm would be applied. So it's a much more selling-oriented model and we trained on that during the first quarter and early in April. So that is something that we've been preparing with this portfolio expansion.

Understood. That makes sense. And if I could squeeze one last question, maybe for David here. Just thinking about the cadence of revenues through the rest of this year, should we be expecting just steady sequential increases through 2Q, 3Q, 4Q or is this going to be more heavily weighted towards those end of the year quarters as some of the new offerings in the pipeline begin to contribute?

Thank you for the question. I appreciate it. We expect to see sequential growth every quarter, with some of it leaning towards the latter part of the year. As we receive more VAC approvals, particularly for Cohealyx, which will be a significant contributor for us this year and next, we anticipate that those approvals will boost our performance more towards the end of the year. Overall, we aim for steady sequential growth for the rest of the year.

Okay. That’s really helpful. Thank you for the questions.

Thank you. Our next question coming from the line of Chris Kallos with MST Access. Your line is now open.

Thank you for taking my call. Hi, Jim. I just wanted to ask some clarifying point on the vitiligo initiative. So could you just maybe just clarify, where exactly that stands at the moment, in terms of pursuing reimbursement?

Yeah, Chris, I can. Good to hear from you. So, what we've done is, we have made a decision to pause spending on vitiligo because of the uncertainty of achieving reimbursement in the office-based lab setting, which is a physician's office. That's where the market desire to treat is and RECELL is not reimbursed for vitiligo there, only in the hospital. As a consequence of our expanded opportunity in therapeutic acute wound care and the big opportunity we have there, we've decided that the best use of our resources is to build that market. So as of now, we don't have a plan that we can define for solving vitiligo. Therefore, we've suspended spending as a consequence until we identify a path.

Reimbursement agencies?

I'm sorry.

And that would include ongoing discussions, now been suspended with reimbursement agencies?

Since we talk with them on other reimbursement matters, we'll be talking to them about this. So it's not an absolute zero. But I'd say there should be no revenue dependence in any future estimates for the company on vitiligo until we come forth with some defined plan.

Understood. Thanks a lot. Thanks for clarifying. Thanks, Jim.

Thanks, Chris.

Thank you. And I'm showing no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. Jim Corbett for any closing remarks.

Thank you, operator, and thanks to those of you listening. We really appreciate your interest in AVITA Medical. I hope you have the time to join the AVITA showcase, reminding you that you can go to our website, click on the Investor tab, and register for it, which is scheduled for next Tuesday, US time. We hope to see you there. We think we've got a really interesting program for you, and thank you very much.

This concludes today's conference call. Thank you for your participation and you may now disconnect.