Avita (ASX:AVH) share price pushes higher on Q3 update

This morning, medical device developer Avita Medical Inc (ASX: AVH) released its Q3 FY21 results to the market. Here's what happened.

This morning, medical device developer Avita Medical Inc (ASX: AVH) released its Q3 FY21 results to the market. Avita’s shares are up 2.9% at the time of writing.

While many ASX companies saw a V-shaped recovery coming out of COVID-19, Avita’s shares haven’t been so lucky as you can see from the chart below. Its shares were trading above $16 pre-COVID and have since lost over 67% of its value.

AVH share price

Source: Rask Media AVH 1-year share price chart

Avita background

Avita is in the field of regenerative medicine and has developed a platform positioned to address the needs in skin restoration through its novel technology platform – the Recell system.

The product works by preparing spray-on-skin cells, an autologous suspension made up of the patient’s skin cells necessary to regenerate a natural healthy epidermis.

Q3 result highlights

Across the third quarter, Avita reported Recell revenue of $8.8 million, a 126% jump from the prior corresponding period (pcp).

Procedural volumes were 492 across the period, compared with 408 on the pcp, and 487 in the prior quarter ending 31 December 2020.

6 new burn centre accounts were added in Q3 bringing the total to 99, or a penetration rate of 73% of the 136 total US burn centres.

Of the estimated 300 US burn surgeons, 244 have been trained and certified with Recell through Q3, a penetration rate of 81%.

What else?

Gross margins fell to 76% across the period from 84% on the pcp. Management noted this resulted from lower recell price points for units that were purchased under contract with BARDA.

Operating expenses across the period came in at $13.2 million, down from $19.7 million on the pcp, primarily attributable to lower stock-based compensation (SBC) and marketing, which was partially offset by higher research and development costs.

Avita finished the quarter with a $6 million net loss and a cash balance of $114.9 million thanks to its recent capital raising with proceeds of $64 million.

On Q4 FY21 guidance, management expects revenue to be between $8.2 million to $8.6 million, consisting of around $5 million from recell revenue and around $3 million from revenue associated with BARDA.

Summary

This seems to be a pleasing result from Avita this morning that the market has reacted positively to. It’s definitely a competitive space with other big names such as Polynovo Ltd (ASX: PNV) offering a similar product offering.

If you’re on the hunt for other ASX growth shares, I’d recommend signing up for a free Rask account to gain access to our stock reports.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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