Good day and thank you for standing by. Welcome to the AVIDA Medical Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message devising your hand is raised. To withdraw your question, please press star 1-1 again. Please revise that today's conference be recorded. All right, then, conference. Over to your first speaker today, Ben Atkins. Please go ahead.

Thank you, operator. Welcome to Evita Medical's fourth quarter and full year 2025 earnings call. Joining me on today's call are Carrie Vance, Interim Chief Executive Officer, and David O'Toole, Chief Financial Officer. Today's earnings release and presentation are available on our website at www.avitamedical.com under the Investor Relations section. Before we begin, I would 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 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 Kerry.

Good afternoon in the US and good morning in Australia. Thank you for joining us today. Before we get into the numbers, I wanna start by coming back to how we closed the last call. In Q3, I ended with three priorities, driving disciplined execution, refining our commercial focus, and positioning a VITA for growth in 2026. The fourth quarter was about delivering on those commitments. You can see that summarized on the slide in front of you. We exited the year with a more disciplined operating model, improved visibility into cash use, and a clearer understanding of how our customers adopt and use our products. We refined our commercial focus around utilization in our core burn and trauma centers. And importantly, we removed sources of friction, reimbursement uncertainty, and restrictive balance sheet constraints that had weighed on execution throughout 2025. These are not headline outcomes on their own, but together they matter. They make the business more understandable, more forecastable, and more repeatable. As we walk through the quarter today, you'll hear how those execution priorities show up in the numbers, in our operating cadence, and in how we positioned heading into 2026. Turning briefly to the results, we reported fourth quarter revenue of $17.6 million and a full year revenue of approximately $71.6 million. This represented about 11% growth over 2024 and was in line with our updated revenue guidance. From my perspective, the fourth quarter was less about acceleration and more about control. The numbers reflect the business that is operating more predictably and with greater discipline. David will walk through the details in a moment. A major focus throughout 2025 was resolving reimbursement uncertainty of resale. As of today, six of the seven Medicare administrative contractors have published payment rates for resale procedures. This removes the key constraint that weighed on utilization throughout the year and has begun to restore confidence for clinicians. As we said last quarter, predictable reimbursement, not only for our products, but also for the clinicians who use them, is what allows our strong clinical and real-world health economic data to translate into routine standard use of resale. With that clarity in place, we are now seeing early signs of utilization beginning to normalize as accounts reengage. Ultimately, growth in this business is driven less by adding new hospital accounts and more by increasing adoption, utilization, and repeated use of our products, Resell, Cohelix, and Permuterm by clinicians. Roughly 90% of our revenue today comes from about 200 burn and trauma centers. We've aligned sales incentives, forecasting assumptions, and field activity around earlier adoption and repeat use within these core accounts. We've also continued to shift away from bulk ordering toward more organic monthly usage patterns. Utilization matters because it creates predictability for clinicians, for hospitals, and for our As we look ahead, utilization will become an increasingly important way we evaluate execution internally. Today, the focus is on establishing the right operating cadence and doing the fundamentals well, so progress can cascade and compound over time. That consistency is supported by the breadth of our platform. Our strategy is built around a single integrated platform, Resel, Cohelix, and Permioderm, used repeatedly by the same clinicians across multiple patient episodes. Resell remains the foundation of our business, supported by extensive clinical evidence demonstrating faster healing, improved outcomes, and shorter hospital stays. The Cohelix 1 post-market study is now fully enrolled, and the Permiderm 1 study is nearing full enrollment. These studies are designed to generate practical, real-world clinical and economic evidence evidence that reflect how surgeons use these products in wound care, with data expected later in 2026. At the 2026 Boswick Burn and Wounds Symposium last month, investigators presented early findings and case experiences from these studies. Also notable, two cases presented from the podium reported all three of our technologies, Resell, Cohelix, and Permioderm, used together on individual patients. This reinforces that our strategy to evolve from a resell-only story to a multi-product acute wound care platform is translating into real-world clinical practice and higher revenue per patient opportunities. Outside the U.S., we are taking a disciplined distributor-led approach as we build our footprint in select markets where there is clear clinical need and the right regulatory and operational foundations in place. Since receiving CE mark approval for Resale Go last October, we've supported initial clinical use in a small number of European markets, focused on establishing familiarity and operational readiness. In the aftermath of the tragic nightclub fire in Cran, Montana, Switzerland, our teams and distribution partners were able to respond quickly to requests from surgeons because those foundational elements were already in place. Our role in situations like this is to remain responsive and reliable in support of patient care under extraordinarily difficult circumstances. We will continue to partner closely with the burn community to help ensure access to resale where and when it is needed. As David will walk you through, our commitment to execution discipline is reflected in our financials, particularly in our cost structure, cash use and balance sheet. In January, we refinanced our debt through a new credit facility with Perceptive Advisors, LLC. This was less about adding capital and more about removing the distraction of restrictive covenants so the organization can stay focused on execution. Turning to 2026, we expect full year revenue of $80 to $85 million, representing growth of approximately 12% to 19% over 2025. This outlook reflects normalization of resale utilization, expanded portfolio use within core accounts, contributions from Cohelix and Permioderm, and a more predictable operating environment. This is execution-led growth, driven by consistent delivery, quarter by quarter, and not one-time events or aggressive assumptions. With that, I'll turn the call over to David to walk through the financials in more detail.

Thank you, Kerry, and good afternoon, everyone. As Kerry outlined, the fourth quarter marked the close of a year of stabilization for AVIDA and a transition into a more execution-focused phase of the business. I'll walk through what that execution discipline looks like in the numbers, particularly across cost, cash use, and our balance sheet. Turning first to the full-year view for 2025, we reported revenue of approximately $71.6 million, representing 11% growth over 2024. This marked a further consecutive year of revenue growth for the company and reflects a business that continued to grow despite the reimbursement-related headwind. Full-year gross margin was 82.1% compared to 85.8% in 2024. This decrease reflects certain inventory reserves and impact from product mix and the increased contribution from Cohelix and Permutron. As we previously discussed, while the product mix impacts the reported margin percentage, These products contribute incremental gross profit without a commensurate increase in operating expenses, supporting operating leverage over time. The combination of year-on-year revenue growth and gross margins above 80% provides a solid foundation for us going forward. Turning to the fourth quarter, total revenue was $17.6 million compared to $18.4 million in the prior year period. This was consistent with our revised revenue expectations and showed stabilization within our business. Fourth quarter gross margin was 81.2% compared to 87.6% for the same period last year, driven by inventory reserves and product mix. Moving to operating costs, total operating expenses in the fourth quarter were $24.7 million, down 5% year-over-year. This reduction was driven primarily by lower sales and marketing expenses, reflecting reduced headcount, compensation, and commissions following the commercial transformation earlier in the year. General and administrative expenses were essentially flat, while research and development increased modestly due to planned investment in our Permiderm and Cohelix post-market studies. The fourth quarter included $1.2 million of one-time severance costs, which will not be reoccurring. Excluding these costs, fourth quarter operating expenses were down 10% year-over-year. For the full year, even with the non-reoccurring severance costs included, operating expenses declined by $10.4 million, or 9%, reflecting a substantially lower operating structure going forward. Turning to cash, the key takeaway here is improved control and visibility around cash The fourth quarter marked the third consecutive quarter of improvement in net cash use, declining from $10.1 million in Q2 to $6.2 million in Q3 and $5.1 million in Q4. As we look towards the first quarter in 2026, cash use will increase due to the timing of annual compensation and payroll related items, which is expected and planned for within our operating model. We ended the quarter with $18.2 million in cash and marketable securities. In January, we refinanced our debt through a new credit facility with Perceptive Advisors, LLC. The levels and flexibility in this facility are meaningfully better aligned with our current operating trajectory. Under the new agreement, the revenue and cash covenants provide substantially more headroom. To put that in context, the initial trailing 12-month covenant of $68.5 million translates to only $15.4 million of revenue in Q1 to not trigger the Revenue Covenant. For the full year of 2026, the trailing 12-month requirement of $73 million is aligned significantly below our 2026 revenue guidance. In addition, the minimum cash covenant has been reduced from $10 million to $5 million, significantly lowering covenant risk and reinforcing that the facility was structured to support execution rather than constrain it. The facility is interest-only with no amortization and includes optional incremental capital if needed, subject to meeting a certain revenue milestone. Overall, this refinancing was about simplifying the balance sheet, reducing friction, and removing distraction. From a financial perspective, our priorities for 2026 are straightforward. Maintain disciplined control of operating costs, support revenue growth with a stable and scalable cost structure, and continue cash efficiency as revenue increases. Through that financial framework and improved capital structure and a clearer line of sight into 2026 growth. We believe AVIDA is better positioned to execute consistently and move towards financial sustainability. With that, I'll turn the call back to Kerry.

Thanks, David. In summary, the actions we've taken over the past several months have positioned AVIDA for a stronger and more consistent 2026. We've restored reimbursement clarity, simplified our commercial focus, removed operational friction, strengthened financial discipline, and advanced the clinical evidence underpinning our multi-product platform. Those actions set the execution milestones we'll report against throughout the year. As we move through 2026, our focus is straightforward. forward. Do what we said we would do, report it clearly, and let execution speak for itself. With that, let's open for questions.

Thank you. At this time, we'll conduct the question and answer session. As a reminder to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. And our first question comes from the line of Ryan Zimmerman of BTIG. Your line is now open.

Good afternoon, and thanks for taking our questions, guys, and appreciate all the color and clarity today. On the guidance, David, with the new revenue covenants, how would you have us think about the pace of growth through the year? Is the 15-4 a good jumping off point for Q1, or are you trying to, you know, message that that's, you know, well below kind of what you can do and so there's no covenant risk there? I think that would be appreciated. And then I have a follow-up.

Yeah, and I'm sure Kerry may have a couple things to say also. But the 15-4 shouldn't be taken as anything around guidance at all, Brian. What we're trying to do is what you indicated is say that there's a lot of headroom for the covenant number of $15.4 million. You know, we had $17.6 million in the fourth quarter. We wouldn't expect to go down that much in the first quarter. We've given guidance of $80 to $85 million. And even if you annualized that just over four quarters, you wouldn't get to it anywhere close to that $15.4 So, you know, we're not giving quarterly guidance, as you know, but that $15.4 million was just to tell everyone that the new debt was structured to take covenant risk off the table, and that's what we've done.

Very clear. Thank you, David. Oh, go ahead, Kerry.

Yeah, Ryan. So, yeah, I would just kind of pile on to that. think that our jump off point is Q4. I mean what we strive to do in Q4 is to kind of normalize and kind of flatten things out in terms of the ordering patterns and our ability to forecast so we feel good about not only the performance of Q4 but our handle on the business to the point where we were able to I think understand Q1 and I think so far we continue to understand in Q1. So, I think from Q4 to Q1 and from Q1 through the rest of the year, you should see progressive growth, gradual acceleration. And I think we have a good understanding of our business and more to come on that.

Appreciate that, Kerry. And then, you know, we could spend a minute on the reimbursement dynamics that, you know, affected 2025. So it sounds like much of, you know, what hampered 2025 with the max is behind you. But if you could give us a little more color into kind of the reestablishment of payment from the six, you know, of the seven max, you know, are you, you know, what do you have now that you kind of say with certainty? And what's holding up that seventh max? Is there anything we need to be concerned about or is it just, you know, something administratively? Maybe you can just spend a little bit more kind of, you know, talking through kind of what has transpired over the last, you know, call it quarter and into the first quarter.

Sure. So, first of all, we're highly engaged with all seven. I think that we can put these in buckets, meaning, you know, we got commitments months ago that they would publish. Then they did publish. And then once they published, you know, it's a matter of kind of hospital by hospital, physician by physician, them becoming aware and them putting it into practice in terms of getting reimbursed and kind of returning to a clarity that will help us going forward. So that's occurred as each of the MACs kind of came on board. In terms of that seventh one, we're highly engaged with them. That's all I can tell you is that there's no reason to be concerned, just that we're engaged with them in a process and in their process and we're hopeful and expect that they will publish as well okay thank you thanks thank you my questions sure thanks Ryan thanks Ryan thank you one moment for our next question our next question comes from line of Josh Jennings of TCAL your life not open.

Hi, congratulations on all the progress on the refinancing and great to see that six or seven max of established payment rates. I wanted to just ask about first, can you share with us just a core customer experience where Cohelex and Premier Derm have made it through the back process and are you seeing signals or what signals are you saying that giving you confidence that there ultimately can be strong co-helix and permeoderm attachment rates in resale cases.

Yeah, I mean, I think the – thanks, Josh. I think the process is that we have a champion in some of these accounts that – for permeoderm and or co-helix, and we work with them from a clinical perspective, the economic perspective to help them understand the value, and then it's put into VAC and that champion helps move it along, and the idea is that once it comes out of the vac that that same champion then starts to push it into the department and into their practice. So we've seen that in a few of the vacs where those products have exited, and that's been effective in terms of us getting some uptake out of the back.

Excellent. And is there kind of an all-star account where COVID-19 and DERMA have made it through that back process and you're seeing nice attachment rates in resale cases?

Well, no, I probably can't point to one right now, but I would say that when we were at the Box with Burn conference, as I said in my comments, that there were a couple presentations from physicians that used all three of the products, Resale, Cohelix, and PermiaDerm. And I think that, again, is early days in terms of someone using all three of those. But I think we'll be able to report out more going forward as these products come out of the back and as they begin to be used in conjunction with each other.

Understood. And you still have Cohelix 1. and permidine 1 study data to help with that utilization trajectory. And just ultimately, I mean, do you see cohelix and permeoderm adoption driving increased demand for resale as well? I mean, I've been thinking about resale pulling through cohelix and permeoderm, but down the line, could cohelix and permeoderm get you into more accounts or just drive utilization higher in their 200 trauma slash burn center base?

Yeah, I mean, that's a good question. I think, you know, Resell is the established brand. It's the product that's been around the longest. But ultimately, we have relationships in these accounts. We have physicians that are using Resell that I think are at least drawn and open to the discussion around cohelix and permeoderm because of the relationship we have and because of their affinity for resale, but you're right. I think that those physicians that may not be using resale or even institutions that may not use resale, if they're drawn to cohelix or we end up really making some progress there, of course, it allows you to make a connection and establish a relationship there and have the dialogue around treatment and care that could lead to a resale discussion as well.

Excellent. And then just lastly, you know, just I think I'm going to know the answer to this, but just want to check the box with some of the turbulence around max and payment rates for resale.

Just as you start to see adoption and utilization of co-helix and premium over the course of 2026 just review the the reimbursement pathway and then I think there's a clear clear pathway there's not going to be any hurdles but just to again check that box if you can lay that out for us that'd be great thanks take on the questions I mean again I think you're correct I mean we've we've had to deal with these these physician payments through the max over the over the last year but we we don't expect any other disruptions to that to that process going forward other than continuing to work through these in the months to come.

Great. Thank you. Thanks, Josh. Thank you for our next question. Our next question comes in line of Ian Arndt of Lake Street Capital Markets. Your line is now open.

Yeah, thanks for taking the question here. I was wondering if you guys could break down the primary drivers of growth supporting your 2026 guidance specifically how much is predicted on the recovery and phase three cell lines versus new contributions from your co-helix and permanent launches would you mind would you mind repeating that it's a little bit quiet um it's hard to hear that question yeah sorry about that um i was wondering if you guys could to kind of break down the primary drivers of growth supporting your 2026 guidance, specifically how much is predicated on the recovery base or recovery and base resale volumes versus new contributions from Cohelix and Permian Care launches?

Yeah. Thank you.

It'll be mixed.

I mean, we expect that – we expect growth in all three product lines, and we expect most of that to be driving increased utilization within existing accounts, whether that's additional physicians or additional types of procedures. So we see that trajectory in terms of utilization and have that plan in place. And so we expect all three product lines to grow, and we expect them to grow mostly within existing institutions where we have relationships going forward throughout the year.

Okay, thank you. That's really helpful. I got a quick follow-up, if that's okay. In the third quarter, you guys noted that roughly one-third of your target accounts were in the VAX review for CoHelix. Can you provide an update on the conversion area of those reviews and the active ordering accounts? Are you seeing any specific bottlenecks in the process?

Any significant, I'm sorry, am I seeing, currently we have, I'm sorry, currently we have, have how many in Cohelix back, is that was your question? Yeah, just based off of the comments from the third quarter, if you could give an update on the conversion rates of those reviews that are non-active ordering accounts, are you seeing any follow-ups in the process Yeah, so without just kind of giving a number, though, I would say that, you know, they continue to come out of VAC, Cohelix VAC, at a kind of a steady rate, and we would expect that over the next, I would say, six to nine months even. And so as they come out of the VAC, they are starting to order product. And so for us, that is going to be a continual kind of week-by-week, month-by-month, quarter-by-quarter process of anticipating and understanding that they will come out of the VAC and when they do, get them to order sooner, larger, faster, and to have a very positive experience with it, obviously, as well, and to develop more than just that one champion in the account so that it can, you know, broaden and deepen. But what we're not seeing in the VAX is bottlenecks, other than administrative bottlenecks. It's just they go through their process, and there is no set time. It depends on the account. And we provide them with all the information, whether it be clinical or economic, to make the argument that it should successfully go through the VAC. So we haven't seen denials through the VAC, really, but it is a process that takes some time, and we've seen that.

Very helpful. Thank you, guys.

Thank you. To conclude the question and answer session, I would like to turn it back to Carrie Vance for closing remarks.

Thank you, operator. Thank you to everyone else who has joined us today as well. I look forward to updating you on the progress in the quarters to come. So thank you. Have a good rest of the day.

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