RCEL - Earnings call 4 2023 | AVITA Medical, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the AVITA Medical Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jessica Ekeberg, Director of Investor Relations.

Jessica Ekeberg

Thank you, operator. Fourth Full Medical's Call. XXXX AVITA to Quarter Year and Earnings Welcome

actual release for call our December me today. Jim differ Relations with information. Chief David for Form and review earnings to during management's promises ended results our statements are today's forward-looking could and section.Before factors you Financial available Reform SEC, any Chief cause Today's provided Joining me call based XXXX, and we Please Corbett, the These XXXX. by begin, Act on remind XX-K the for call filings include recent the that of risk his www.avitamedical.com to the website, nor under expectations the Executive expectations as let Officer; implied year Officer. turn expressed is Investor forward-looking within over XX, or on and of known most this now statements Any uncertainties neither statements. involve are guarantees on that risks this specifically Jim from comments. forward-looking the call the meaning will the unknown of statements materially within will additional Private Litigation are I the described Securities O'Toole,

James Corbett

an the and quarter today. you call of XXXX, us and and you, today's Jessica. Thank full Good afternoon, on will fourth by I for financial followed highlights thank update priorities business begin for XXXX. joining by our year our discussing

the quarterly Q&A.During February strategy provide I the over guidance. Following XXXX committed XXXX our commentary call, before XXXX this annual to outlined and will call to the and priorities, on performance David, update, our to I providing growth conference our who and opening financial XXXX call will turn guidance

strong, performance ] Medical, Additionally, I XXXX. providing mark plan delivering our increase trajectory. of fourth growth to for that.We would transform quarterly over XXXX significant year in trajectory. finished sustained business million, report AVITA our a [ new representing XX% our emphasized growth did we multiple XXXX of indications, This $XX.X I'm which revenue point in a we highlights dramatically quarter turning period to pleased just growth commercial same the that

defect to the and leverage alongside portfolio. points allow call January of matrix our full healing.The into commercialize the exclusive overlapping used launch skin of further many be to year. nature to commercial is PermiaDerm products of treatment selling agreement integrate in million, X commercial of treatment XX, achievement defects, and wound facilitates is until of growth to allow PermiaDerm's of into the giving FDA is reflecting in focus in a professionals that to a by skin wound of $XX.X an the impressive representing the achieved. closed types the medical will we of over flexible distribution revenue healing the and adjustability we needs XXXX, This of with level XX% we flexibility it, full-thickness dressing on customize the year the wound. healing. ability United initiatives This PermiaDerm high is our growth X-year clinicians range biosynthetic States. of specific to complementary can our shortly.Shifting us the address our cleared these to that the For full-thickness our the wound for Medical use meet PermiaDerm Stedical porosity initial developments, organization entered transparent, PermiaDerm recent announced and cases of burn prior which Moreover, I with a aid to wide significant of strategic effectiveness effectively permeability stretch

our our marks efforts during you some our have facilitate this call experience to partnership customers. March, partnerships. effort into their at our I European care we and on update our first report strategy. on quarter, during organization our had as Last happy to RECELL plans that will aimed selling that step Switzerland through expansion launched expand after expanding wound in distribution The Germany, Our commercial I'm will third-party completed international portfolio Australia quarter of launch first to to the January training distributor products and in our wound within PolyMedics, first Austria treatment.Moving unveiled PermiaDerm and European will we most Union expected. and of the

GO. will as new distributor the supplement for we continue you identify partnerships.Turning to update We to PMA RECELL

the completed request to fulfill have FDA's in-house was information. the necessary We testing for additional that

submit As expect to XXXX. to we XX, February on previously response stated, our FDA the

to we XX, of the plan launch May on XXX-day XXXX. restart real-time the With review,

our the manufacturing to to entire and and GO, assembly RECELL made assembling durable we that of the on last manufacturing the Moving Ventura both components of bring in-house process facility. our the during and call decision we to mentioned disposable strategic

will in We located be also service for durable center Ventura. completing be the will that a

renovating part our been on will have distributing are to Ventura in-sourcing increase the of and of PermiaDerm serving our our facility by This this GO.As tenfold. We products. Ventura to track we ahead to launch the PermiaDerm expansion process, complete facilitate housing also other With capacity along distribution. for RECELL transfer as with May customers, facility our the allow XX of hub

ensuring throughout for quarter.While the renovations distribution, and dislocation. as X next expansion As the are well of operations have of on our final we to for in a this physical our These focused fuel commercial completion we capabilities third phases the our we space scheduled completed operational the field work XXXX assembly result next expansion, being will also efficient for growth, of enhance with manufacturing are phase organization. to years ample as during

the organization keep our and our defects. territories XX this, high. in skin for half growth by to new to from objective maintain aligning strategy overall achieve which sales early commercial rate XXXX, was on small our growth in territories team during of our strategy with first adoption our indication our strategically we people occurred our and of both To XX focusing new to XX full-thickness increased sales sales expansion, Our primary cases from XX

expanded total XXX. new capitalize our force Consequently, commercial full-thickness sales adding thereby Specifically, defects. will label allow $X the should an sales adoption on organization, the process, XXXX. of analysis force million us our facilitate our $X and plan the to half our aimed intensify the during of which territories focus again to for to we average approaching value penetration and territories to our to growth. to will in expanded are keep the And is growth.Moreover, and of our to a to commercial skin our we XX positions expand be threshold organization committee coverage million XX ability under effective therefore, bring efforts We maximizing on latter

expanded expanded place team our third force, field X. different broadened With full-thickness RECELL. to by expect our quarter skin provides add pursue new to call, accounts with We for our field the set us scope an commercial XXX of and be our current applications discussed organization we expect sales approximately many during in defects XXXX.As during to April we opportunity

of sales must a Value Analysis access this specialties single lengthier within approval, we known in pursuit, As multiple Committee, a facility resulting VAC, process. physician part also to get

skin we In affirm to XXx over line the to smaller expanded by sample. surface full-thickness by of defects, intend will with accommodates FDA cartridge patients order in different have approval patient patient We a opportunity smaller donor wounds, burns. durable as of that to are will RECELL skin label same body to life PMA patients RECELL earlier a providing in This of In to achieve We with developing the GO anticipated. for GO, the the with opportunity with repigmentation year-end.Now increases the GO vitiligo reusable continue supplement patients mini evaluating affected. the have treat a X% the expanded population indication design us in submit to than our device stage is January, we mini.RECELL turning RECELL of vitiligo area total the less and completed than enrollment post-market being of initiative. address TONE, designed this quality study, impact on its XXX

Our assessment that have months at collecting, July. To period data begin we treatment. XX follow-up to the the scheduled post include to strengthen in assessments initial X-month additional an are follow-up we extended are

to like to begin quarter GAAP is an payer coverage in during to supported by financial to position XXXX, in breakeven throughout to phase study anticipate we submit with economic our rollout the by separate of commercial discussions the established turning for would achieved of phased end fourth flow and cash the the quarter expect the commercial the initial States.Before Subsequently, second quarter likely organization We commercial us to of communicating a our outlook. health XXXX. coverage regional on publication dates of profitability. previously study committed address I appropriately XXXX. both David, basis as begin coverage this study and The United a call we which over the I sized

the closing, path milestones We the quarter for within pleased resolute continues. updates in our expansion of inflection marked established to over dedication adoption no later I'd our turn sharing we us, are remain shareholder growth XXXX. indications point call to value on growth that both forward We David. have commitment report and a our In an and achieve look XXXX our that, than through portfolio. exciting innovation sustained continued to and and to to to increased third our unlocking like I to progress.With of further

David OToole

Jim. you, Thank

quarters of Since million QX XXXX, the XX%, to XX% million, same increased strong $X.X year more we QX have deliver financial of growth revenue XXXX, XX, X the compared with XX%, rates XX%, our $X.X period concluding results. million growth commercial prior of sustained $XX.X the impressive in XXXX. the revenue same in ended the year. continue than a to the December in In We months to commercial demonstrated

fourth third driven were X strong by key and largely Our quarter factors. results

which defects pre-existing boosting capitalize able us full-thickness sales. trauma those to burn we accounts, have in First, of on immediately also market were skin to center enabling centers, centers, our half thus

for period our the significant approval new on have compared production driven of to the number burns market.Gross a And the adoption in the products. This was of VAC increased in we sales XXXX. continue benefit in in in increase margin Second, XX.X% was received and increase we to profit from same gross by lastly, XX% quarter accounts. margin

Ventura million to $X.X As is facility. in benefit the XX% due with representing G&A increase the of $XX.X as is to an The cost discussed our in stock-based quarter million sold incurred the in an R&D fact we TONE attributable fixed, which $X.X increase million to from to of associated for have expenses GO we facility related primarily primarily sales and XXXX. in recruiting accelerated approximately increase, Ventura. previously, increase in compared production the same employee-related the costs, goods RECELL expenses our recruitment compensation, in-sourcing $XX the employee and were operating million operating study of production period Total cost of expenses and associated with compensation expenses and costs, including consulting in costs, we costs of cost.Additionally, third-party was costs to that

year gross commercial profit million year our sales due the and was same December $X.X Alongside our XX%. by promotion the full driven individual sales headcount XXXX, a related $X.X cost increased expansion, by fees consulting the million increased of deeper and XX% first commercial to by and of increased to $XX.X driven costs.Lastly, in FDA and the period XX% higher compared of The salaries by in this the commercial profit $X $X.X expenses year expenses including Lastly, fourth per the $XX.X and to end compared or net operating costs, a of a of loss a same expansion compensation, $XX.X share in in employee-related per defects increase the increased in for TONE $XX.X in at organization revenue our primarily ended expense period year full equivalents recruiting the with the year the XXXX.As the was of study, to securities full-thickness a per supplement quarter $X.XX of to $X.XX million travel primarily the by increase $XX.X XXXX. or million XX, a revenues largely $XX.X margin the due million, along $XX.X expansion to had same commissions, loss $XX.X costs, was loss December million share $X.XX full or of half result in second of year we $X.X loss our employee-related million, the G&A million growth loss of in XXXX. expanded in completion of was June million per $X.XX of R&D to the compensation. cash, and of penetration of of result cash XXXX. compared of by Net gross expense in compared marketing XXXX.For for team. in a of share full organization stock-based XX, million loss of and The share million RECELL costs guidance in were benefits, compared Total through including for is operating compared within to work loss and million the attributable as commercial costs final stock-based accounts, XX, of to million a GO marketing in full XXXX. as net or marketable margin in December largely XXXX to period quarter XX% the The to PMA customer of loss $XX.X Net commercial as XXXX costs XX.X% the of increased and launch for for skin to XXXX. million the an our XXXX.The the was of

During the call, our OrbiMed October I agreement we into quarter credit conference third discussed with on XX. entered

reminder, a debt million As million at total $XX facility was of closing. the funded $XX

have reaching end balance of XXXX. and do of third either the of before cash this not, XX tranches year. With of million we cash breakeven we the need of they remaining previously, no at expectations for later flow as As this $XX expire time, our a foresee than December the our quarter million discussed current of $XX.X at

guidance. to We we to cash reserves have our that are confident XXXX our achieve goals.Turning sufficient now

range the million $XX.X $XX.X to revenues For growth in expect period reflects over the rate XX% commercial in and XXXX, we be XX% million. between This the of first a same to quarter of XXXX.

Our the to XXXX. to guidance growth XXXX $XX.X is be range year $XX.X which million would to annual full XX% compared for revenue expected in reflect the and million, between of XX%

unrealized structure. decision structure foreign the business Lastly, to the net of of we improve the exchange the income million $X.X noncash legacy wind gain restructuring translation in foreign to the made gain down impact operations. efficiency foreign recorded in operating reporting subsidiaries Due corporate and adjustments during cumulative of expense deferred was statement other to previously of subsidiaries, on a was the the $X.X our limited the our fourth equity. reorganize our quarter, This million or and operations

expect thank operating at We foreign Medical, be operator call AVITA you will AVITA completed a joining Medical to of which of later for the this your I and Americas year, no subsidiary subsidiaries that, restructuring point our And than primary for will owned the now we Inc., be third company, quarter LLC, turn us. no exist.With will the the back questions. to wholly

Operator

[Operator Brooks Markets. with Capital Lake first question comes Street Instructions] O'Neil Our from

Brooks O'Neil

procedures approval, surgeons Congratulations having just get color I about couple then in I performed you the you love bit hospitals? on if little by offer first, the a you can backs, guess, see hospitals have getting those any the would you're the us I back [indiscernible] experience a questions. of to with get could you experience about progress. maybe and tell the

James Corbett

Hey, very Brooks, much. thanks

have is longer experience of describe process. And the over speaking, very we're So cycle first, to back a label. some we the in broadly XXX frankly hospitals broader stage well having. me time we're What let experiencing related the

commensurate in we're, XX X they're different involve and most cases, indications, So course X of to needing reimbursement. and as or as many DRG physician or specialties

a like -- wave complexity little now we've has a coming a unfortunately lot quarters. -- bit it them So X and of there There's the at it's ashore. been

selling we're sales moved are because starting it the of RECELL-eligible requires we happens. the it's a one reasons is that good when that up label year, advantage that nearly having so more more take a but patients. skin broader everybody -- to rapidly the is you've in defect time keep mind is and splash during But we And they one And our to So a intense process. happy real full-thickness XX,XXX ashore. because expansion RECELL-eligible patients, patient got on that experience could in sense, in burn XXX,XXX level, metaphor

worth in getting results. cases we penetrate to very before these So us having haven't clinical hospitals. and it's really And seen for we're experience good it treated that

we're very good feeling really the about we're So progress making.

new So the add answer we the year, obvious, during expect accounts. XXX approximately to to

Brooks O'Neil

very That's helpful. Great.

talk you're beginning any burn feel progress centers we X just perhaps activity you of level making level within So to a call the the you're could capturing and X bit incremental about trauma some on. little

James Corbett

typically Level sales our were just Well, clinical certainly, well we clinical in go physicians model meetings. to are. X And burn That's the lead our They prior our experience years. the data in them of lead years. centers. commercially not the because RECELL reached over and few by coverage find aware We are last trauma they

in progress as that get I to you more becomes -- getting we're those are earlier. and describing seeing was But cases. So as more much VAC right, instances we those because complex,

Brooks O'Neil

Great.

one just it, and me sales expansion Can can embarking find ask with that you little expansion substantial confidence Obviously, just your a last bit experience had Appreciate force color. Let talk expansion. about, year the all right expansion. more. the on now your a first people the a complete call you second you second let's the of to we're and the

James Corbett

We where what sales have the XX, at team. we of sales awards opportunity. the really expect on can the in in have company tell it's of our a to the after technology, been because become sales great and the celebrated very we you, sales end for their them make Dallas, March. have happen how by expansion expansion rapidly creates has time, the rep many we to sales And a ability I was meeting, and was successful that proprietary did Well, initiated really and And and complete and be impressive momentum our special the national that really technology growing territories. experience have for hiring a January national at really we the common same I that meeting and is we are

the that work is of come exists for an indicator to in So demand indirect that to AVITA. the marketplace

Brooks O'Neil

Congratulations on the terrific results.

Operator

Joshua Our question TD Cowen. with comes next from Jennings

Unknown Analyst

us you Within opportunities growth of full-thickness I'm launch Eric on XXXX, the opportunities for much and growth Josh. of [ could assuming GO. some for? is help How think in understand ] these here? for for thinking RECELL This different your the XXXX, account you you're guidance do of will what

James Corbett

and RECELL XX% growth. all, of first guidance substantial RECESS will so our of manual the essentially Well, system. between growth anticipates XX%, replace GO

quite not RECELL processes it's them a very goes the not as separate quite skin by -- not not easy the with and disaggregates that disposable it it's will kit. So sales -- the create RECELL to durable cassette dollar it's itself, replace that that, and because GO will a actually the

of assumption view, it RECELL That driven from So defects. really big into is by an full-thickness really area. skin the point growth penetration is

that We core our business. minority the to become continue will business gain to skin defects. full-thickness time, But the in relative share in of burns total

So mentioned expect when all, majority of -- add defect principal but year, the the not the accounts we vast sales we will during approximately of the cases. I XXX -- be all to earlier those new that full-thickness skin

So Is real that's driver. helpful? the that

Unknown Analyst

for that be that and thinking That that we be should internationally, time is maybe your is. take something there? partners driver more Or 'XX? Is maybe XXXX. should contributions and of from bit then a Europe we distribution little might thinking a real And thinking

James Corbett

international. regarding Well, Yes.

Switzerland, distributor, company signed the the PolyMedics. we've we our covering is is which mentioned, Germany, Austria European As of first and countries

Now similar been exactly sophisticated their just VAC though, committee. year, started have they've They these any and in will build they they don't that because a have done cases. something however, through initial States, had as the the volume as the like launch equivalent days have their think We and though. market -- trained have they United initial

distributors So adding European in year. other we'll markets additional throughout be the

to is with goal finish Our covered. year the Europe largely

I and this and be we emerge is Germany, making demand contributions understand case, Austria our mind. that partners foundation us will to distribution in year pattern We and a get And we we that see But projections 'XX of all the Switzerland. as will revenue. will think get update and our place will going guidance -- from, 'XX material momentum little with in be in where behind to in be the the

Operator

Our O'Brien question Matthew Piper Sandler. comes with from next

Unknown Analyst

for difficult all you start guidance down Phil I expect on some of [ is the VACs? measured? any of starting color guidance Matt. to just I be Congrats more is ] implies going reacceleration is to guidance. these on an it guess more guess on that do a comps? back-half you on So just cadence knock This Appreciating Or inflection weighted, as progress. growth as of

James Corbett

receiving Well, and a half. VAC fully drivers. in quarter, more in during of will second the second first be we we're quarter there's here the that productive that The couple will approvals receive actually, the

So account, over time coming new the that's a convert following. reflection. adoption year get you And any a you increased

that So is incorporated.

are expecting, and RECELL earlier will less easier cases We XX. May replace as RECELL clinical launch that make And will GO RECELL you will also our require GO learned support. manual do, to

tied delivery RECELL So for GO there's and will training the but our to as productivity. sales organization the business inevitably our GO using se, RECELL per for customer reduce cause requirement sales and of the does no higher to vehicle direct our conversion

those our core assumptions So rather model. are in

Unknown Analyst

then relates products, it to other specifically Stedical filling need that AVITA I you bag additional guess road? feel products down with your maybe as will That's you about strategy any And when the the it Scientific comes a follow-up, talk to as can and helpful.

James Corbett

solve products other there's competitor. and is, that on with can a we them. a our Sure. our point, technology our help because use we And help patients does well that are real significant that problems. our that have direct very of and and in have proven who RECELL wounds. bring what have this to is opportunity their Yes. and have used we products injuries clinical Well, have with very RECELL, the products support surround And the a at these mission use cases and not And with patients physicians customer we

can much wound see-through. with more used with, own. to example. conjunction It's in the It matrix many for convenient wound is RECELL an be its cases example The in of manage PermiaDerm that use porous, is we in cases it's some on So that.

a a is of technical that products call it a There are diagram. point overlap almost it's point of So meaningful are view, full similar. -- Venn a from other

a expect a scaffold dermal the and technology to that think the find field important year. us researching to technology I very is suitable we've in, invest in and for coming been

So going think patient develop care likely our overlap -- -- are population. others I company. care there to that call are this be and -- and this broader there really may And wound wound point overlap we population there's physician company into a acute

Operator

Our Ross comes with Cantor from next question Osborn Fitzgerald.

Ross Osborn

for Maybe mini. may RECELL GO the spend why on developing for attractive smaller product progress. the on some Would Congrats more just on one as RECELL not and this me wounds. you for just be rationale time

James Corbett

what asking. Ross. So thanks RECELL understand the I you're GO, for question,

me let So through. you walk

excuse significant under them. for It are the it's customer, kit. to sense So make portion some, And centimeters, manual the a And What in is of surgeon the physicians very have, wasteful. TBSA X,XXX we full-thickness RECELL that that is a cases that's GO RECELL replaces about designed find under kit centimeters. to that to RECELL square XX% the have, XXX X% the treat doesn't patients quite square covered seems me, which is TBSA. that the to XX% wound TBSA using a product very simple

tissue than -- RECELL GO volume reason mini, has so the RECELL So cassette. that what standard RECELL we merely mini we'll a less have the is cassette

smaller RECELL you'll And both larger helpful? use a RECELL RECELL they'll mini, treating treating Is a durable. wound, if fit you'll if you're the wounds, So that GO use standard. the you're GO into

Operator

Our next from with BTIG. comes question Zimmerman Ryan

Ryan Zimmerman

what 'XX, comment. of Want us help reps profitability to early get expenses from little to these of know a and track the mind here bridge revenue your again. of for but to or -- kind of kind levels how too expense ask especially about long-term there, are maybe in the context the it's there kind the adding underpinning in to your assumptions what the guide I all

there. investors sure to make want thinking your Just understand

James Corbett

to guidance those give ready 'XX, Well, we're not for but any for directional I of give you elements thoughts. some can

XX% growth rate. growth revenue On the line, to XX%

Our gross profit on continue the to and be RECELL been XX%. has will

then very can greater can on say, the it rate maintaining And would 'XX. a first revenue calculate I into fundamentally exit the you than or before of growth QX XX%, so, you I think. And of depends back into, rate profitability all. of

only means in that half, bigger our organization. we in so having we'll in case, the we'll are And accelerate back have heavier not revenue guidance this a

we So that second of the last year. is of course, growth should. And against rate half actually accelerating

that rate So growth the XXXX. in that's means go into we

think takes footprint. Remember, the with kits of month accounts penetration sales into it larger these So I rate, new growth the greater in a X only breakeven combination a cost. to for rep

and had months. Because So -- X in about market, learned when that launch. only in have we'll learned And been again a much we just time from months. sales time, by we we've in just bigger second X we've our only burns it had full-thickness -- we we X learned it expand keep the in we been mind the force the first quarters in the that of

So that market very deep Is XXXX helpful? full-thickness. of that reflects into penetration

Ryan Zimmerman

color the just Maybe another Very ask there. appreciate question. I And Yes. to helpful.

system you with you no of make these into. in the manual Given to little offers, not are so value analysis lot And out you RECELL and system, right just maybe but kind model business that switch result impact a air I'm and kind go bureaucratic there's that of going the one you are institutions no component. the that that collecting you're are in selling the that behind sure you're pocket the itself, a benefit then now bit of a for as smoothing how where when is RECELL that. process change to and with try And just GO, there of consumable with have that, revenue facilities GO but design want appreciating process to RECELL wondering the introduce system. you're you're the

James Corbett

Yes. It's a really good thought.

we The to [ RECELL, first customers the the RECELL call the will to launch they understand make for get it, to GO principle ], is easy that what for RECELL have our of them RES the it Skin to get buy CVAP Spray-On GO and [ cassettes. to the ],

not making we're cost that since So to them commitment adopt. for very billing for charging durable, or or believe to the them we them them easy make a for to going make it we're

Operator

from Our Kallos with next comes MSTF. question Chris

Chris Kallos

force you the wanted Good other does you to and to imagine there of your I pick online? around are first that those how the with products you How just, and around part Congratulations. the any second going markets? up international portfolio the part scaffolds, products PermiaDerm. impact into to result. coming sales can the I thinking on look is, question. they're just see My adjacencies adjacent thoughts taking And that different do And into. products balance have mentioned to

James Corbett

Yes.

there. So multiple questions

So by these all the to definition. are and on adjacent following fit products, that the They same the the -- same indications. used the physicians, respect patients, are products with same so

our access a and uniquely sales halo. rep direct to has our have frankly, base. bit hospital because rep is The It of the customer So good competitor. rather with, is RECELL a a to brand positioned a doesn't

opportunity. that our customer need So a having other is might products today real leverageable

results of bring our to additive think the of and customer add that a to, we vendors hospital impact additive terms of fewer our what and is company. to in in additive course, this value we terms So as

a fits RECELL. might it And of So this or different a will patients and to it is PermiaDerm discussing we promoting the be often, a or discuss RECELL case. used of But so than patients doctor, be patient. possible selling RECELL chosen applications more all when biosynthetic those PermiaDerm indications in with we're wound of candidates for several uses on different matrix before many patient

many opportunity reps reasons will needs have the of it to give customer. to an fulfill So our the

and domestic U.S. PermiaDerm a very your to last Now contract partnership in only. is is -- it's relationship in currently, a structured this question, built the the relationship. we're it's agreement a way Notwithstanding as the real

for expect we be a lot to So with of PermiaDerm years.

Chris Kallos

And you this like are helpful. international very thinking that's that in of And with terms Great. at point? PermiaDerm, products way going

James Corbett

RECELL establish thinking that nascent we'll strategy. We're the in is at take priority of and time. this doing primarily just will because so early first, international that. really some not way really to we're the that stage much And point, be We're our that

priority a I don't isn't it So that to strengthen -- portfolio.

a is finding helps did Europe, the the already, sell portfolio one with which sign more we're we're them including RECELL. distributors that what fact, -- have considering, In in the all broader helps we

moment, I strategy. this a domestic U.S. think at the So is

Operator

question next comes from Wilsons. Williams with Madeleine Our

Madeleine Williams

for to, process regards color do launching much what bottleneck to and with process, I the going quarter get going whether and ongoing to get you've full then In back the the that into in second half, guidance be is you to just like uplift guidance. the taking I trauma of guess, how first centers. given the year you're the obviously mean into able account that

James Corbett

Well, a think it's Madeleine, good question. I

the largely them started more value to continue we've committee -- new and out and more the out. I process the we and of think consequent consequence start of coming more complex ones. we we're coming through the The started because process analysis accounts they're new are

but is And much. is But candidates. is fourth many the it market with us with it So but bit complex. not a many patient quarter, bigger much indications it more little possible more a what and note that treatment we comes that do more and different slowed in

So And happen. year. to accounts XXX good about nearly we first other won't the I VAC to think much targets and expect add we're, And mentioned for here really in probably hear make quarter hitting new after well call, you we're on for our the pace the than a this I've right we're progressing we're that now that year.

Madeleine Williams

Yes.

translating regards in in in to GO then just know utilizing And sort discussion to, terms I and crossover of the guess, the I and surgeons that with able burns color. some RECELL I mean, between sales, both great surgeons. That's into being in of there's of more Okay. But the aware RECELL? they utilize difference is of sort already RECELL And are trauma already access happening?

James Corbett

challenge GO, at between moment. of output difference the the this going with conversion the have and all, But focus we're wholesale Well, with don't to of approval the product. done for private a, our It's RECELL them customers a I discussing That going first is business talk them. the have is will a we wait not same. approval, we think for. we're RECELL X of to since groups to RECELL for I GO word about the FDA to be of think be don't that model. big them We've introduce how

RECELL with GO RECELL want [indiscernible]. who will So the RECELL do so will to use all use durable customers -- a and

So QX. execute that we it will be during a conversion

Operator

comes from next question Our America. Lyanne Harrison Bank with of

Lyanne Harrison

how go I think of surgeon is come trained then as so rest RECELL there? training, the GO, currently I we ready have it of about launch it is? occurs to that launched rest-of-the-world And the should world, been with if rate they're back mentioned think May? And could did RECELL that with to them familiar the But If secondly, also community you I hasn't about when the know in the having how the conversations PolyMedics you're familiar RECELL yet. about adoption you on GO

James Corbett

Got it.

Okay.

That line were across Japan familiarity good anywhere is, I'd Japan Let and them time. make all RECELL and sure up. this say not moderate but we me in said, I Europe to already. There during Australia with commercial

introducing market most think be RECELL to I going new. we're into So a where are

Now RECELL MDR, sometime to we system Austria is Switzerland and gets -- now. standard RECELL third RECELL its we are called first, mark will in GO which quarter, just let's with the take And Europe XXXX, GO the through the the Germany, which in it's expect CE and converge. when respect RECELL launching they

configuration see for RECELL the when some distributor RECELL Europe, seen may customers the on and not signed have in we in distributors RECELL it. a original not some first used ever So GO and the time or have depending

product that RECELL a didn't the of matter PolyMedics be it I do on train will we'll we think And on when GO. level. approved. timing is So no, be something That will

Lyanne Harrison

maintain I margin, had improvement about if you quarter, gross for guess mentioned, so then obviously, in about And Great. you talked a gross material think well, you XXXX, for you this margin. that over volumes gross any period? 'XX, that reasoning your don't guided you're that increasing you Is into think watermark you going given margin. to why particularly high there of XX% could XX% I

James Corbett

good Yes. question. It's a

reason in all, a guidance precise, of that. -- exactly XX%. words. first So there's operating of I to I I'm territories And give or be been just emphasizing that my and want We've didn't

call with will rather have that likely very difference manufacturing the you be a be RECELL, that substantial, will we facility. our On rehab the of in makes frankly. may XX%, little in points operation, margin And PermiaDerm a And not couple little XX%. it you investments does XX% some when we're margin Our making captured that bit range. make of -- during completely

one up has the hand, hand. on on product. profit, gone bit profit structure slight we gross will be And a a gross cost our our other the into So introducing mixed XX%

Lyanne Harrison

costs. one Great. Okay. last And question on is for me operating

again saw you which we in So half we that growth acceleration Should that pace over in pretty that is the XXXX, expect costs, expect towards operating XXXX? some revenues you second Or do your get in operating with might there? revenue period. you much 'XX XX% of leverage, of given mentioned for particularly

James Corbett

I'm going in on have David jump to one. this

David OToole

see percentage don't same in We that Yes. sort XXXX. of

We our force. sales are expanding

XX% is either. R&D not by again, to expense a not will as going there as from increase be standpoint, to expense is increase So the But well increase. G&A sales going an

year will see in fourth decrease expenses the the second there you the of -- a you operating at towards revenue. a the third to as -- leverage, indicated, compared So accelerates end and be the revenue percentage as quarter, and will when as our

Operator

to closing any now remarks. for would turn I Jim Corbett the to like call back over

James Corbett

We QX. our you very our for joining to look you much progress forward next thank in earnings announce of call call Well, all to our to today.

Looking hearing you soon. all from you. forward Thank to of

Operator

for Thank participation. you your

now disconnect. may You

AVITA Medical (RCEL) 22 Feb 242023 Q4 Earnings call transcript