AVITA Medical (ASX:AVH) has raised its full-year 2026 revenue guidance following record second-quarter sales, and reaffirmed its expectation of reaching cash flow breakeven before the end of the year.

The dual ASX- and Nasdaq-listed wound care company reported Q2 revenue of $21.7 million, representing 18% year-over-year growth and a 13% increase from the prior March quarter. Growth was driven by sustained demand across the company's acute wound care portfolio, anchored by the flagship RECELL platform and complemented by rising contributions from Cohealyx and PermeaDerm, as well as steady international revenue.

RECELL, AVITA's FDA-approved regenerative medicine system that uses a patient's own skin cells to produce a spray-on suspension for treating severe burns and skin defects, is the company's primary growth engine in the United States, which accounts for the bulk of its commercial business.

Following the stronger-than-expected quarter, AVITA increased its full-year 2026 revenue guidance to a range of $86 million to $89 million, up from the previous forecast of $80 million to $85 million. The revised outlook corresponds to annual growth of 20% to 24% over 2025 revenue of $71.6 million.

President and CEO Cary Vance attributed the performance to the company's broadening commercial reach.

"We delivered a strong second quarter, with revenue growing 18% year-over-year and 13% sequentially," Vance said. "As AVITA continues to expand utilisation in the US and build its presence in key international markets, our results reflect the strength of both our acute wound care portfolio and our commercial execution."

RECELL remained the company's top revenue contributor, generating $18.5 million in the quarter, up approximately 11% from the prior quarter. Management said the growth reflected greater physician confidence following reimbursement stabilisation and increasing adoption of the RECELL GO mini system for smaller wounds.

Cohealyx revenue rose to $1.7 million, up roughly 16% sequentially, supported by favorable interim clinical data released earlier in 2026. PermeaDerm revenue climbed 40% from the March quarter to $600,000 as adoption continued to build ahead of clinical study results expected later this month. International operations contributed an additional $900,000, a 26% quarter-on-quarter increase.

Gross profit margin improved to 81.9% from 81.2% a year earlier. Operating expenses declined 6% to $24.6 million as the company continued to benefit from cost optimization measures introduced during 2025.

AVITA ended June with approximately $11.1 million in cash, cash equivalents, and marketable securities. The company has been working to narrow its losses toward cash flow breakeven, making expense discipline and gross margin gains critical alongside top-line growth.

The company also highlighted a potential regulatory catalyst after the US Centers for Medicare & Medicaid Services proposed 2027 payment changes that, if adopted, would establish national physician reimbursement for RECELL and increase payment rates for hospital outpatient and ambulatory surgical center procedures. CMS reimbursement decisions carry significant weight in US medical device adoption, as they frequently influence hospital purchasing decisions and shape broader commercial insurance coverage patterns.

AVITA reported a net loss of $7.7 million for the quarter, an improvement from a $9.9 million loss in the same period a year earlier. Loss per share narrowed to 25 cents from 38 cents.

Source: The Market Online Australia